Chile's Codelco, the world's largest copper producer, will meet its financial obligations despite a series of operational issues and headwinds from high levels of debt and investments, JPMorgan said on Tuesday.
Codelco's copper production fell to its lowest level in 25 years in 2022, partly due to delays in key projects to extend mine life.
The company cut its production forecast for this year to between 1.31 billion and 1.35 billion tons.
"We believe Codelco will be able to meet all of its financial obligations despite an increased capital expenditure budget and operational issues the company is facing that have led to lower production and higher unit costs," jpmorgan analyst Ian Snyder said in a note.
JPMorgan estimates that the Chilean government could provide support to Codelco through direct capital injections or continued reductions in upstream dividends, allowing the company to invest if necessary. Codelco pays all its profits to the state.
"That said, we do expect credit metrics to continue to deteriorate as the company may issue additional debt to help fund part of its capital expenditure budget," the note added.
In August, Chile's Copper and Mining Research Center (CESCO) said in a report that Codelco was at risk of bankruptcy due to rising costs and mounting debt from projects that have not met production targets.
Earlier this month, Codelco's chairman, Maximo Pacheco, told lawmakers that the company was "financially sound" and called CESCO's projections "nonsense."
