Copper prices fell on Tuesday despite a decline in the dollar against most major currencies, due to expectations of production growth in Chile.
Chile, which represents about a quarter of global copper production, expected its output to expand during this year despite the challenges facing two of its largest mines, providing some relief to a global market suffering from tight supply.
A fatal accident at the largest mine of state-owned Codelco, in addition to problems in mine waste at a project run by Teck Resources Ltd., complicated Chile’s efforts to reach its annual target estimated at about 5.6 million metric tons. However, the giant Escondida mine of BHP recorded an 11% increase in output in the first half compared to the same period last year, while the Collahuasi mine is preparing to exit from a period of low-grade ore production, and the El Salvador mine, after its redevelopment, has begun to increase its operating capacity.
Mining Minister Aurora Williams said, in an interview from her office in downtown Santiago, that she still expects growth this year and next, reaching a record level of 6 million tons by 2027. She added that this would be a remarkable achievement for a country whose production fell to its lowest level in 20 years in 2023, at a time when companies are struggling to renew old mines and find new deposits that are difficult to develop. She also pointed out that the outlook for the metal is improving in the long term.
Williams said: “I believe that production will increase, and that Chile will be able to enhance its participation in the global market. Market indicators show more supply in the future.”
This comes with the rise in global demand for copper used in electrical wires, driven by the transition toward clean energy and the construction of more data centers to operate artificial intelligence technologies.
But the copper market has previously experienced disappointments from Chile, as the state copper agency Cochilco expected several years ago that production would exceed 7 million tons by now, which has not yet been achieved. And Codelco remains a key player in that equation, as it tries to compensate for years of weak investments.
Expectations have recently improved with the conclusion of two integration deals expected to add nearly 300,000 tons to the country’s total output, according to company estimates. Codelco is putting the final touches on a merger between the Andina mine and Anglo American’s Los Bronces mine, while Anglo and Teck are working on a similar deal to merge the Collahuasi and Quebrada Blanca mines. In addition, BHP and Lundin Mining Corp. have a major project on the border with Argentina, and BHP and Rio Tinto are cooperating in promising exploration projects with Codelco.
The minister considered that the merger agreement between Anglo and Teck represents a “positive signal” about the vitality of Chile’s mining industry and the global copper market.
Regarding the recovery of the El Teniente mine from a tunnel collapse that killed six workers, Williams said that Codelco may have to use other means — such as more automation — to reach deeper levels of deposits, depending on the results of the investigation being conducted by the Sernageomin authority.
She added: “Chile faces the challenge of developing underground mining at increasing depths. And if there are risks, in a country where safety is a priority, we will have to look for alternative mechanisms.”
On the other hand, the dollar index fell by 0.5% by 16:15 GMT to 96.8 points, and recorded the highest level at 97.3 points and the lowest level at 96.7 points.
As for trading, copper futures for December delivery fell by 0.2% to $4.70 per pound at 16:10 GMT.
