Fynsa
Copper prices are at record highs, as demand remains strong and inventories are at record lows. But the good news is relative for producers. For various reasons, some of the major copper producers have had to revise their 2022 production forecasts downward. BHP, Anglo American, Antofagasta Minerals, and Codelco got off to a rough start this year, reporting production declines in the first quarter of 2022 and projecting lower-than-expected production for all 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 revised their production forecasts for the year downward. Aside from the effects of the pandemic, the main reasons are linked to the aging of the mines —with a decreasing amount of copper per metric ton of ore— climatic factors and, especially in Chile, water availability issues.
According to analysts, the long-term outlook is not so promising. Difficulties in obtaining environmental permits and public opposition to mining projects are jeopardizing plans to increase production. Environmental authorities in Chile, for example, rejected Anglo American’s Los Bronces Integrated Project in April—a US$3.3 billion investment to extend the life of the Los Bronces mine, located near Santiago.
The political climate isn't helping either. The global risk analysis firm Fitch Solutions lowered its long-term projections for Chilean copper production citing the possibility of regulatory changes for the sector stemming from the new Constitution and the new government’s policies, 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 metric tons by 2031—significantly lower than the previous estimate of 8.9 million metric tons.
Source: Cochilco
