Chile's copper production may be affected

The largest copper producer, Chile, has successfully dealt with the pandemic disruption that caused the stagnation of mining in other countries. Last year's copper output exceeded 2019.

This has helped Chinese smelters maintain supply despite tight markets and high prices. But an organization representing industry giants said that although Chile is ready to deal with the second wave of infections, the final output may be affected.

The BHP Group's Escondida and the state-owned company Codelco's mines, etc., are restoring restrictions that were used in the early stages of the epidemic—such as demobilizing some workers and requiring others to work remotely—to protect Employees, and maintain operations amid rising infection rates in Chile. They can do this by delaying non-essential activities such as maintenance and earthwork preparations.

Joaquin Villarino, chairman of the Chilean Mining Commission, said: “If the epidemic continues for another year or six months, the measures implemented on the mine may eventually affect production.”

In an interview with Bloomberg Radio, Villarino quoted government agency Cochilco as saying that Chile, which accounts for a quarter of global copper mine production, produced slightly more than 5.8 million tons last year. He said that this is in line with the forecast and is similar to or slightly higher than the level in 2019. The Bureau of Statistics plans to announce December copper production on January 29.

He said that if the industry and individuals continue to adhere to the measures taken last year, Chile’s mines should be able to continue operations, even if the country’s infections are increasing. Nevertheless, the virus and its results are still unpredictable, and industry insiders are still highly cautious.

Villarino said that the industry has offered to help the government carry out vaccination, but miners do not have priority over other workers in the country.

Affected by China's demand recovery, continued supply disruptions and the weakening of the US dollar, copper futures prices surged to a multi-year high on Wednesday, at approximately US$3.64 per pound. But Villarino is "calm" on whether copper prices have entered a new super cycle. He said that the fundamentals show that the long-term price is close to US$3 instead of US$4.

He said that although prolonged high prices will bring more pressure on wages, labor unions in Chile know that prices are cyclical and operations must be sustainable in the long term. He was referring to a series of collective bargaining processes.

He said that high prices are a good sign of Chile's investment prospects, but they are not the only variable in decision-making. Political and social stability should also be taken into consideration.

He said that Chile is about to draft a new constitution. If this process is carried out under a respectful and open framework and progress is made in the field of environmental protection and indigenous rights, Chile has the opportunity to improve its international reputation.