Chile will reverse the drop in copper production in the coming years, said the Minister of Mining

Chilean production of copper It will recover in the coming years after recent weak performance, Chilean mining minister Marcela Hernando said Thursday, adding that dialogue with the industry on tax adjustments helps moderate concerns.

A combination of factors has hit the vital sector of the largest world producer of the metal, which led production to close with a year-on-year drop of 5.3% in 2022.

Hernando acknowledged that the country is going through a “productive slump” caused by a drop in mineral grades, delays in some projects, accidents and other logistical obstacles.

“We hope that this bump, which we have to pass in any case, will be significantly offset in the coming years (with more production),” said when remembering that There are mining investments planned for US$ 73,655 million until 2031, a large part in copper.

Global giants operate in the Chilean country such as bhp, Glencore, Anglo American and Teck.

The official said that the industry, mainly state-owned, must also work to resolve logistical bottlenecks to reduce, for example, the copious circulation of trucks with concentrate and other materials that “could be transported by train or ship.”

The private industry has criticized during the lengthy discussion of a royalty project that the tax burden would reduce competitiveness against rival producers such as Australia and Peru.

Hernando said that she feels “tremendously confident” that all industry players were heard for the design and adjustments of the royalty, and that they were diligent in reviewing the tax burdens of competing countries.

“This is a fairly agile market and it is constantly evaluating, they are long-term investments and what these companies privilege above all is stability,” he said during an interview in Santiago a few days before the start of the World Conference on Copper CRU-Cesco.

The minister -in addition- said that it is expected that the copper demand increase significantly due to the fight against climate change, which increases the attractiveness of the mineral.

price projection

The Central Bank recently raised its forecast for the average price of copper for this year to US$ 3.85 per pound, aligning it with the latest estimate made by the Chilean Copper Commission (Cochilco).

“When we make projections we try to be as conservative as possible and in this context we prefer to stick with market expectations. (The forecast) seems adjusted to us, it is close to what Cochilco has already anticipated and therefore there will not be many variations in that ”, assured.

In his government promises, the president gabriel boric He spoke of expanding the country’s copper smelting capacity in order to reduce the amount of concentrate exported for more elaborate products, such as cathodes.

Hernando said that this objective is due to the need to reduce the current dependence on other countries that are in a position to set prices or penalize for mineral treatment.

“There are decisions that do not necessarily go through whether it is profitable or whether the smelters that exist in the rest of the world are sufficient for all the copper that is produced. There are strategic and geopolitical considerations.” stressed.

Regarding the judicialization of projects and the increase in social pressure due to environmental issues, the official considered that if the companies made their inquiries earlier, they would have fewer problems when processing their permits.

Although he declined to refer specifically to the draft copper Anglo American’s Integrated Bronzes, which will evaluate next week a ministerial body of which it is a part, Hernando said that there are good projects that require efforts from the firms to establish compensatory or preventive measures.

“We regret that many times some projects have a bad start but that they are not corrected from the beginning and they end up defending positions and in the end they end up being prosecuted”, pointed.

“It will not matter the same, regarding future demand, what type of copper we are producing, the less carbon footprint it has, the better,” opined.