Chile's Codelco launches austerity plan after lower production forecasts

SANTIAGO, Dec 23 (Reuters) - Chile's Codelco, the world's largest copper producer, will launch an austerity plan intended to boost its earnings in the short and medium term and optimize production and investments through 2027, the company said on Friday.

The state-owned miner cut its 2022/23 production goal in October, amid lower prices and poorer ore grades, and indicated its lower output levels would continue for a few years.

The company estimated a 2022 copper output of between 1.435 million and 1.465 million tonnes, below its previous forecast of between 1.49 million and 1.51 million tonnes. In a statement Friday, Codelco said its Chief Executive Andre Sougarret had ordered the immediate implementation of an austerity plan, cutting spending on materials, third-party services and events, among other things.

According to the statement, Sougarret asked top executives to, by the end of January, present a complete plan regarding production and investment between 2023 and 2027. Codelco is currently implementing a multi-million-dollar investment plan to develop so-called "structural projects," which it hopes will offset lower mineral grades at its deposits.

The company said it will continue to invest in structural projects as well as the renovation and maintenance of existing infrastructure, mining projects and environmental and community commitments. The miner highlighted that the spending cuts should be carried out "without affecting labor safety standards." Codelco has faced pressure to improve safety policies after two people died at its mines last July.