Chile’s Codelco has already lost $17.5 million on Chuquicamata strike

Chuquicamata is the world’s largest open pit copper mine. (Courtesy of Codelco via Flickr)

Chile’s Codelco, the world’s largest copper producer, has already lost $17.5 million due to an ongoing strike at its Chuquicamata copper mine, its largest operation, as the labour action enters week two.

About 3,200 unionized workers in Chile downed tools on June 14, after failing to reach a deal with the state-owned miner.

According to local mining consultant PLUSmining, the copper giant is losing about $2.5 million per day in missed production, estimated in 500 tonnes per day.

That means the impact on Codelco’s revenue is already of the tune of $17.5 million, while lost production amounts to about 3,500 tonnes.

The copper giant is losing about $2.5 million per day in missed production, equivalent to nearly 500 tonnes per day

The company, which last month reported an 18% year-on-year drop in its first-quarter copper output, is in the midst of a $5.6 billion project to turn century-old Chuquicamata, its second largest copper operation by size, into an underground mine.

The last blast at the bottom of the open pit was carried out in November, though copper extraction goes on. The company has said it plans to gradually decrease activities

Chuquicamata’s switch is part of Codelco’s 10-year, $39 billion-overhaul of its core assets, and is expected to extend the iconic mine’s life by at least 40 years. It will also allow the copper giant to keep up production rates, despite falling ore grades and increasing costs at its operations.

Annual production from “Chuqui” — as locals call it — once it has fully transitioned to underground extraction is projected to be 320,000 tonnes of fine copper and 15,000 tonnes of molybdenum.

Codelco, which hands over all of its profits to the state, holds vast copper deposits, accounting for 10% of the world’s known proven and probable reserves and about 11% of the global annual copper output with 1.8 million metric tonnes of production.

Ugly trend

The world’s main copper producing nations have been showing output declines this year, according to the International Copper Study Group (ICSG).

Global production declined 2.4% in February 2019, when compared to the same month last year, with 1,515kt (19,749ktpa) of contained copper produced globally.

Chile led the pack with output down 7.1 % y/y to 415.9kt (5,412ktpa) while Peru, the second main global producer, saw its output fall by 5.1% y/y to 176.1kt (2,296ktpa).