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April 21, 2022updated 04 May 2022 5:55am

BHP’s copper and nickel output hit by Covid absenteeism and local unrest

BHP has cut its copper production target for this year due to problems at its Escondida mine in Chile and Covid-related labour constraints.

By Zachary Skidmore

Australian multinational mining giant BHP has reported a lower-than-expected copper and nickel output. The reduction has been blamed on Covid-19 absenteeism and social unrest throughout Chile, leading copper and nickel output to fall 10% and 13%, respectively.

Large outbreaks of Covid-19 stifled production in Chile, made worse by roadblocks and social unrest at its Escondida mine. The mine has been the centre of controversy lately, with a recent legal filing by the Government of Chile against the mines operated by BHP , Antofagasta, and Albemarle on the grounds of alleged ‘environmental damage’ in the northern Salar de Atacama salt flats.

Glyn Lawcock, head of resources research at Barrenjoey, said there was growing concern in Chile over an “anti-mining underlying current” that appeared to be emerging in the government. Problems over resource nationalism have persisted, leading to fears that this could constrain copper supplies due to Chile’s outsized importance in the market.

Impact

As a result, BHP has reduced its maximum expected copper output for the year ending 30 June by 140,000 tonnes and expected nickel output by 10,000 tonnes. BHP fared better in its iron ore output, which remains its most important commodity, with steady output in the same time frame.

Rival Rio Tinto has also experienced a challenging start to the year, struggling to bring on new projects to replace ageing mines due to labour shortages and supply chain problems. This week, the miner reported that iron ore output had fallen 8% in the March quarter compared with the same period last year.

Brazilian competitor Vale similarly reported a very weak start to the year, as heavy rains and operational problems led to a 6% decline in production, to 64 million tonnes in the first quarter of this year. These declines should provide further support for iron ore prices, as it remains unlikely that either Vale or Rio Tinto will hit their expected production targets.

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