DBRS Releases Report on the Corporación Nacional del Cobre de Chile (Codelco )

DBRS has today released a report on Corporación Nacional del Cobre de Chile (Codelco or the Company) that supports the recent confirmation of Codelco’s Issuer and Senior Unsecured Debt ratings at “A” with Stable trends. The rating confirmations and Stable trends reflect Codelco’s position as a world-leading and cost-competitive copper producer, with large reserve and resource bases.

Codelco is wholly owned by the Republic of Chile (rated A (high), Positive trend by DBRS), but its debt is not guaranteed by the Chilean government.

Over the next five years, Codelco plans to invest approximately $27 billion in capital expenditures, aimed at increasing copper production to 2.0 million tonnes by 2017 (2011: 1.8 million tonnes). Although the outlook for copper markets is among the best for the base metals, the uncertainty caused by slowing economic growth in developing countries and sovereign financial crises in Europe and elsewhere, leads to the expectation of volatile copper prices. As a result, the need for additional funding is expected during this expansionary period. In addition, as seen with the Anglo Sur investment, acquisitions cannot be ruled out. DBRS therefore expects the Chilean government to continue to provide financial support for Codelco’s expansion plans and its funding needs.

Over the longer term, Codelco’s large reserve and resource bases and competitive operating assets can be expected to maintain the Company as a leading player in the copper markets. The ongoing industrialization and urbanization of China, India and other lesser-developed economies should provide ready markets for this widely used commodity.

Notes:
All figures are in U.S. dollars unless otherwise noted.

The applicable methodology is Rating Companies in the Mining Industry (June 2011), which can be found on our website under Methodologies.

Today’s report and the November 27, 2012, press release are available at www.dbrs.com or by contacting us at info@dbrs.com.