Biggest Copper Nation Says Production Decline Is Just a Blip
(Bloomberg) -- Chile, the top copper-producing nation, expects to be able to navigate both the pandemic and a slew of wage talks to increase output of the metal this year.
Production from a country that accounts for a quarter of the world’s mined copper will increase 2-3% from 2020 levels, Mining Undersecretary Edgar Blanco said. Giant mines run by companies including Codelco, BHP Group and Antofagasta Plc have the protocols in place to continue operating through a surge in Covid-19 cases in Chile and tighter restrictions, while upcoming collective bargaining processes should proceed without any major disruptions, he said.
“I continue with the estimation that we are going to grow our production this year, one of the few countries that will be able to do so,” Blanco said in an interview Friday.
A dip in output in the first three months of the year is the result of particular issues at mines such as maintenance or periods of lower grades rather than an industry trend, he said. The implication is that production will pick up in the coming months, which is good news for smelters hungry for material amid disruptions elsewhere and recovering demand.
A decline last month was more to do with an especially strong March last year, Blanco said. The government copper agency is yet to disclose output for March.
Copper prices surged to the highest in almost a decade in late February on the prospect that vaccinations and stimulus would unlock a sharp global recovery. Since then, prices have eased amid fresh lockdowns and a rising dollar. The metal was down 1.1% to $4.05 a pound at 11:52 a.m. in New York.
“While the market is showing significant volatility, we estimate that it’s going to hold above $3, $3.50 for the rest of the year,” he said. “We expect prices will tend to stabilize toward the second half.”
Project development is also getting back to normal in Chile. Mining generated almost 30,000 new jobs in the past few months to return to pre-pandemic employment levels. With prices almost doubling over the past year or so, there’s also been an acceleration in some early-stage projects.
“There has been a lot of interest by companies to advance in the stages of evaluation of projects,” Blanco said. “Some already produce, so it’s easier to execute and benefit from the increase in prices that we see in the market now.”
Asked about the risk of strikes in Chile as high prices embolden unions and companies fight to contain costs, he said there’s more of an atmosphere of dialog than in previous years given mining’s importance to economic recovery from the pandemic.
“As a result, I’m very optimistic about the upcoming processes,” he said. “There’s willingness from both sides to talk.”
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