Chilean copper production growth to slow this decade: report

The production Chilean of copper it will grow at a slower pace during this decade and will also require all projects in the pipeline to come to fruition, revealed a report by state news agency Cochilco seen by Reuters.

The Chilean Copper Commission (Cochilco) recognized that although the forecast production for 2033 of 6.58 million tons represents an increase of 17% compared to the performance of the world’s largest copper producer in 2021, it is “quite minor” to previous estimates.

“This responds to the fact that many of the important projects in the next decade have not advanced in their engineering or in the preparation of environmental baselines in these years of pandemic,” noted the report.

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Despite the fact that in the two previous reports the production peak was expected for 2028, the agency now expects that it will be achieved in 2030 with 7.14 million tons, a volume lower than previous estimates.

“It is not observed that it is possible to advance the productive peak because for the start-up of a project it is necessary to carry out several studies and analyzes, which takes a long time, taking into account the high amounts involved”, specified the head of studies of Cochilco, Víctor Garay, in response to Reuters about the report.

The optimization of the initiatives, carrying out analysis of environmental impacts and more exhaustive engineering would be factors that contribute to the delay, he assured. Added to this is the increase in input costs due to inflation and problems in the supply chain between 2021 and 2022.

The report also pointed out that even considering the initiatives that seek to keep current sites operational (replacement) or those that seek to increase the capacity of active operations (expansion), it is not possible to reverse the drop in production.

“It is necessary for all those new initiatives in the national investment portfolio to materialize, which would contribute 17% more production by 2033″, the document highlighted.

The slowdown could boost global prices for the metal, which has soared since 2020 and exceeds $9,000 a tonne, as neighboring Peru – the world’s second-biggest copper producer – is rocked by protests that hit some major mines.

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The industry has demanded that legal certainty be guaranteed for its investments in the midst of the agitated environment that has caused the intention to write a new Constitution in the South American country.

And the situation could get more complicated. Freeport’s chief executive said on Wednesday that expansion projects in Chile would be frozen until the political situation was clearer.

The Cochilco report specified that in the period 2022-2026 there would be a drop compared to the result of 2021 but “It should close the cycle of production losses associated with the pandemic” of COVID-19.

Meanwhile, between 2032-2033 it would record a productive drop of 0.9% because 36 operations will write down or close “Without expectations of replacement projects that allow them to continue.”

Cochilco also warned about a change in the productive matrix since most of the initiatives considered seek concentrate production over hydrometallurgical processing, which has an installed capacity of around 2.2 million tons of fine copper.

“The new investment initiatives are aimed at expanding or extending the operational life of sulfide mineral sites or even creating new mining operations in the concentrate line,” Garay commented.

The large number of initiatives that seek to expand or extend the operational life of sulphide mineral operations or even create new mining operations in the line of concentrates, will have a positive impact on the production of these, the agency said.

“In short, the production of concentrates will grow by 46.4% between 2021 and 2033, going from 4.21 million tons to 6.17 million tons,” accurate.

Source: Reuters