Chile’s mining minister Marcela Hernando has claimed that the country’s copper production will increase in coming years, despite recent decline.
Speaking in an interview with Reuterson Thursday, the minister claimed that government discussions with mining firms over planned tax and royalty changes were helping to alleviate industry concerns.
Hernando blamed a drop in mineral grades, project delays, accidents and logistical problems for the “production slump”. “We hope that rut, that we have to go through anyway, will be significantly made up for over the next few years”, Hernando told reporters.
She added that there are nearly $74bn in planned mining investments in Chile, many of which are in copper. Chile produces more copper than any other country, accounting for 28% of global production. Mining accounts for half of the country’s exports and 11% of its GDP.
Chile saw a 5.3% year-on-year copper production drop last year, the third consecutive year to see a drop.
Chile is home to a number of influential mining companies including Codelco, the world’s top copper producer, BHP Group, Glencore Plc, Anglo American and Teck Resources. Mining companies have complained about policy in the country since President Gabriel Boric came to power last year pledging higher taxation and a new constitution.
Copper demand expected to rise in Chile
Neighbouring country Peru is the world’s second-largest producer of copper. The industry has warned that large companies may relocate given rising taxation in Chile.
Hernando thinks this unlikely, telling Reuters: “What these firms value above all is stability […] and one of the things that is recognised in this country is political stability and respect for laws and international treaties”.
Recent protests in Peru have lead to a decline in copper production for Chile’s neighbour and competitor. Production decline there has contributed to an overall copper deficit throughout 2023, which some are predicting could last until 2030.
The CRU World Copper Conference is due to take place on April 17th in Chile, with a number on industry leaders expected to attend and discuss demand, pricing and supply.
Hernando predicts that demand for the metal will rise due to its role in implementing the energy transition. According to the International Energy Agency, on average electric cars require double the amount of copper than fossil-powered cars for their production.
Hernando predicted that copper’s market price would remain stable, with an average price this year of $3.85 per pound, in line with Conchilco’s predictions. She stated: “When we make projections, we try to be as conservative as possible, and in this context we prefer to stay with market expectations”.