It was around mid-2008 that your ear-to-the-ground Otto first heard about Codelco sniffing around Ecuador. The real reason was that Chile’s State-run copper company (that also happens to be the world’s biggest single producer of the stuff) was advising the Studmuffin gov’t about what it could do to move its large copper projects forward. Those projects are headed up by Corriente Resources (CTQ.to) (ETQ) at Mirador and then a bunch of potential greenfields dotted around the area.
Coldelco’s advisory role made (and still makes) a lot of sense and for sure the guys from Chile would have knocked some of the basics about copper mining into the heads of the Ecuador mining ministry dudes, but as day follows night the unfounded rumours soon started about how Codelco was moving into Ecuador, how Codelco was in line to buy out CTQ, how Codelco would be fast-tracking Ecuador into a a bright and shiny copper-coloured future.
It was all bullshit, of course. But today we had a new chapter as Reuters filed this report about how Ecuador wants to go JV with Codelco on its copper projects. We get quotes from the Vice-Minister of Mines José Serrano and all the shebang. All of which, again, being as likely to transpire as Hugo Chávez declaring his homosexuality on CNN tonight.
Let’s see the wood for the trees here. Firstly, Codelco has never repeat never operated outside of Chile. Not once. Not a since ounce of copper, not a feasibility study, not a nothing. Second, the swandive drop in industrial metals means there is a large oversupply now in Chile, not just in working mines that were looking to expand but also with greenfields/brownfields that were being investigated by Codelco and its satellite companies with the view to grooming them for ramping to production. There isn’t a single reason why Codelco should or would get involved with another project in another country right now.
Next, José Serrano is a dick. He’s been the main cheerleader and has spun all the lines to media in the last 12 months and has been….let’s say….overoptimistic on many occasions (especially about timelines while the mining moratorium was in place). The dude Serrano can wish and want all he likes. A link-up with Codelco might make good copy inside Ecuador for a while but it just ain’t gonna happen, period. Chile no wanty Ecuador copper. Chile got mucho mucho already.
More likely is the sudden realization over at the mining ministry that copper is now selling at less than half the price of last year and their prized copper projects aren’t so interesting any more. It sounds to me as if Serrano is using some uber-naive notion to try and winkle a definitive deal out of the Chinese (because be in little doubt, tis the Chinese that will buy CTQ and develop Mirador).
Finally, it’s doubtful that Reuter’s best reporter in Ecuador, Alonso Soto, would have filed such a toe-the-party-line, mediocre, one-sided report without finding out the other side(s) of the story. This is one of the problems with the standard of journalism down here; the difference between good and bad coverage isn’t at an editorial level but at a reporter level. This story by Alexandra Valencia looks like it was filed with the minimum of fact-checking and fuss. Maybe one day I’ll write a post giving my veeeeery subjective, biased and unfair list of “which reporter to read” for each country down here, but for the time being I’ll stick with Ecuador and say that Soto (at Reuters) and Stefan Kueffner (at Bloomie) are good names to look for at the byline.