Chile copper production seen recovering from January’s slump

Stock image.

Chilean copper production is expected to recover from the leanest January in more than a decade to register a similar annual haul as last year, according to the president of the country’s mining society.

The world’s biggest supplier saw output slide 7.5% from January 2021, with lower ore quality and water scarcity among the reasons. In some cases, the factors holding back output are temporary, said Diego Hernandez, a former chief executive of Codelco and Antofagasta Plc, who now heads Sonami. 

“This year should be the same as last year or maybe slightly less,” he said in a telephone interview on Thursday. 

That’s good news for a global market characterized by low stockpiles and surging prices, which has been further rattled by the fallout from Russia’s invasion of Ukraine. Chile accounts for more than a quarter of global supply. 

While Chilean production is set to rise next year when Teck Resources Ltd. brings an expansion on stream, there’s a dearth of major developments beyond that. Little recent investment “is starting to show,” he said.

That’s unlikely to change until there is greater legal and regulatory certainty in light of proposed changes as part of a constitutional rewrite and a bill to overhaul the tax system, he said. 

As the war in Ukraine roils global markets from oil to wheat, copper is less directly impacted given Russia isn’t a major player.

Still, copper prices continue to push higher as investors see commodities as a haven and as consumers look to stock up given supply-chain fragilities, he said. “Everything has to be rearranged a bit in this tumultuous moment.”

(By James Attwood)

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