Copper prices are at historic highs, as demand remains strong and inventories are at minimum levels. But the good news is relative for producers. For various reasons, some of the major producers of this metal have had to adjust their production forecasts for 2022 downward. BHP, Anglo American, Antofagasta Minerals, and Codelco started the year on the wrong foot, reporting production declines in the first quarter of 2022 and projecting lower-than-expected production for the whole of 2022. Codelco, the world's largest copper producer, also reported lower production in the first quarter.

Other mining giants, such as Glencore and Rio Tinto, have also adjusted their production forecasts for the year downward. Apart from the effects of the pandemic, the main reasons are associated with the aging of mines —with a decreasing amount of copper per ton of material— climatic factors and, especially in Chile, problems with water availability. 

The long-term outlook, according to analysts, is not so favorable. Difficulties in obtaining environmental permits and social opposition to the construction of mining projects are jeopardizing plans to increase production. Environmental authorities in Chile, for example, rejected Anglo American's Los Bronces Integrado project in April, a US$3.3 billion investment to extend the Los Bronces mine, located near Santiago.

The political environment is not helping either. Global risk analysis firm Fitch Solutions has cut its long-term projections for Chilean copper production citing the possibility of regulatory changes for the sector stemming from the new Constitution and the policies of the new government, as well as growing socio-environmental opposition. Fitch estimates that Chilean copper production will continue to grow, but at a slower pace, reaching 7.2 million tons by 2031, significantly lower than the previous estimate of 8.9 million tons.

Average copper inventory in metal exchanges in April of each year (thousands of metric tons)

Source: Cochilco