Copper output at Corporacion Nacional del Cobre de Chile, or Codelco, the world's largest copper-mining company, rose in the first half of the year to 783,000 metric tons from 675,000 tons in the first six months of 2008, Codelco Chief Executive Jose Pablo Arellano said Thursday.

Including output from its 49% stake in the El Abra mine, operated by 51% shareholder Freeport-McMoran Copper & Gold Inc. (FCX), total production in the first half reached 822,000 tons, up from 715,000 tons, Arellano said at a press conference.

Codelco's output increased from a year earlier due to production at its Gaby mine, which added 70,000 tons of output, as well as improved efficiency at all its operations, the CEO said.

The mining company also produced 10,000 tons of molybdenum in the first half, unchanged from a year earlier.

With copper averaging $1.83 a pound during the first half of the year, Codelco's pretax profit plummeted to $722 million from $4.11 billion in the first half of 2008, when copper averaged $3.68/lb.

If Codelco earnings were reported using the same tax requirements as private companies, it would have posted a net profit of $575 million, compared with $3.28 billion in the first half of 2008.

The sharp drop in profits was primarily due to the impact of the global economic crisis on commodity prices, said Arellano.

The average copper price was less than half that in the first half of 2008, while molybdenum prices fell to an average $20.10 a kilogram from $72.60/kg in the same period a year earlier.

And as world prices for Codelco's products fell, its input costs rose an average 25% in the first half from a year earlier, with energy prices up 48% on the year, though partly compensated for by energy-efficiency measures at the company's mines, said Arellano.

Overall, Codelco's sales fell to $3.26 billion from $5.48 billion in the first six months of 2008. Sales would have been lower if production hadn't increased during the period.

Company earnings go entirely to the public sector, including a controversial allocation to weapons procurement for the armed forces totaling 10% of sales.

As for the recovery seen recently in international copper prices, currently around $2.91 a pound, Arellano said he expects prices to remain volatile in the coming months driven by Chinese demand, but that they should stabilize over the long term.

"We have to keep working hard because the prices of our inputs, especially energy, are high...and the prices for our products tend to be volatile," said Arellano.

-By Julian Dowling, Dow Jones Newswires; 56-2-820-4241; julian.dowling@dowjones.com

(Risa Grais-Targow contributed to this report.)