The decline in the copper price accelerated on Wednesday as pandemic fears grip global markets and mining companies announce a raft of production halts and project construction suspensions.
Copper trading in New York fell by as much as 8.8% to $2.111 a pound ($4,650 a tonne), the weakest level since early October 2016. The copper price is now down more than 25% from its 2020 high, struck near the end of January.
Across South America, where the bulk of the world’s copper is produced, countries including Argentina, Peru and Chile have closed borders or imposed restrictions to contain the outbreak on the continent.
Copper mining stocks declined sharply, led by top US producer Freeport-McMoRan which fell by nearly 25% before attracting some buying towards the end of the day. The Phoenix, Arizona-based company said it’s suspending operations at its Cerro Verde mine in Peru for at least 15 days.
Freeport owns 53.6% of Cerro Verde and operates one of the world’s largest concentrating facilities near Arequipa, Peru.
Last year, Cerro Verde produced 1 billion pounds (450kt) of copper and 29 million pounds (130kt) of molybdenum, positioning it as one of the top three copper mines worldwide. Freeport produced 3.25 billion pounds (1.47mt) in 2019 and before the outbreak was projecting growth to 3.5 billion pounds (1.59mt) this year.
On Wednesday Canadian diversified miner Teck Resources announced it’s halting construction of the Quebrada Blanca Phase 2 project in Chile which requires a $4.7 billion capital outlay. Teck shares were trading down as much as 24% in New York.
It followed news yesterday that Anglo American will slow the building of its $5 billion Quellaveco project in Peru. Quellaveco is expected to start production in 2022 with annual output of around 300,000 tonnes. Units in Anglo trading in the US lost 18.6% of their value. Copper account for roughly a fifth of Anglo’s earnings.
Reuters reports unionized workers at the Escondida mine in Chile, the world’s largest with 1.2m tonnes output per year, requested on Wednesday a halt to operations unless management begins to implement stricter health and safety measures.
Escondida is operated by Melbourne-based BHP and partly owned with Rio Tinto, the world’s top 2 diversified miners. Shares in BHP, which is also the world’s top copper producer lost 12.3% in value in New York, while Rio was last trading down 10.3%.
Brazilian nickel and iron ore giant Vale is putting its Voisey Bay mine under temporary care and maintenance, reducing activity and output as a precaution to protect nearby indigenous communities.