KEY RATING DRIVERS
Sovereign Ownership: The ratings reflect Codelco's 100% ownership by the government of
Unprecedented Investment Period: The company's investment program of around
Elevated Debt Levels to Remain: Debt levels will remain high during the next few years, reflecting the large investments. This large undertaking coincides with a period of lower copper prices, currently at around
Second-Quartile Cost Position: The company's position as a second-quartile cash-cost producer of copper also provides a cushion against future volatility in copper price fluctuations. Codelco's cash cost of production including by-products during the first quarter 2014 decreased to
Key Strategic Asset for
Fitch has witnessed financial support from the government in the form of lower dividends and the permitting of larger allocations of capital so that the company can enhance its capital structure to fund its investment program.
Going forward, the company's operational and financial challenges mainly concern its ambitious capital expenditure plans to 2020. The capex plan relates to maintaining and increasing current volume output levels and improving average ore grades. Should Fitch witness a change in the levels of financial support from the Chilean government during this critical period, a downgrade could take place.
Because of its 100% ownership by the government of
Fitch currently rates Codelco as follows:
--Foreign currency Issuer Default Rating (IDR) at 'A+';
--Local currency IDR at 'AA-';
--National scale rating at 'AAA(cl)';
--UF6.9 million 3.29% notes due
--UF11 million Undrawn Line Program No. 608 at 'AAA(cl)'.
The Rating Outlook is Stable.
Additional information is available at 'www.fitchratings.com'.
--'Corporate Rating Methodology' (
--'National Ratings Criteria' (
Corporate Rating Methodology - Including Short-Term Ratings and Parent and Subsidiary Linkage
Source: Fitch Ratings
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