Chile mining minister sees copper ‘production slump’ reversing

The Andean country is the world’s top producer of copper, which is key to the global push towards vehicle electrification, but it has seen production slide in recent years.

Chile’s “production slump” was caused by a drop in mineral grades, delays in some projects, accidents, and other logistical obstacles, said Hernando, acknowledging too that companies had complained about policy uncertainty since the center-left government of President Gabriel Boric took power last year pledging higher taxes and a new constitution.

“We hope that rut, that we have to go through anyway, will be significantly made up for over the next few years,” she said, adding that there was nearly $74 billion in planned mining investments in the country to 2031, much of it in copper.

Chile, home to major mines of state behemoth Codelco, the world’s top copper producer, BHP Group, Glencore Plc, Anglo American and Teck Resources, saw a 5.3% year-on-year production drop of the metal last year.

The industry has criticized government plans to increase the tax burden on the sector, saying it would hit the country’s competitiveness against neighboring no. 2 producer Peru, though Hernando countered that Chile offered stability.

“What these firms value above all is stability,” she said at her office at the mining ministry in Santiago. “And one of the things that is recognized in this country is political stability and respect for laws and international treaties.”

On April 17, the world’s top copper players will travel to Chile for the first in-person CRU World Copper Conference since the start of the pandemic to discuss demand, prices, supply and other industry topics.

Hernando said she expected demand for copper to rise strongly due to the fight against climate change and shifts to electrification from fossil fuels, and cited positive signs about returning investment in Chile.

On price, she expected the metal to remain stable, targeting an average price this year of $3.85 per pound, in line with forecasts from state regulator Cochilco and the central bank.

“When we make projections, we try to be as conservative as possible and in this context we prefer to stay with market expectations,” Hernando said. “It is close to what Cochilco has already anticipated and therefore there will not be many variations in that.”