SANTIAGO – Chile will produce just under 5.6 million metric tons of copper this year, up 0.8% from 2016, as the recent strike at the giant Escondida mine wiped out much of an expected increase in mine output, says the Chilean Copper Commission (Cochilco).
Cochilco head Sergio Hernandez said earlier this week that the 43-day strike had reduced production by 180,000 mt compared with its January forecast.
The government body had previously expected copper production to rise 4.3% this year to just under 5.8 million mt.
The strike over pay halted all production at Escondida, which produced just over 1 million mt of copper in cathode and concentrates in 2016.
Workers at the BHP Billiton-operated copper mine, the world’s largest by production, ended the strike late last month without agreement, returning to work under an 18-month extension of their existing contract.
Cochilco says it expects copper production in the country to rise 5.9% to 5.9 million mt in 2018.
Hernandez said the 2018 forecast does not suppose any impact on production at Escondida when the unionized workers have to hold fresh negotiations on a new contract early next year.
Thanks to the strikes at Escondida and Freeport McMoRan’s Cerro Verde mine in Peru and regulatory problems at the Grasberg mine in Indonesia, Cochilco estimated that global copper production will rise by just 0.7% this year to 20.4 million mt, compared with the 2.9% increase forecast previously.
But the government agency also cut its demand forecast to 23.7 million mt, up 1.7% from 2016, compared with a 2% increase estimated at the start of the year due to lower demand growth in China, the world’s largest consumer of the metal.
As a result, the global copper market will move slightly further into deficit this year with a shortfall of 85,000 mt, compared with 63,000 mt predicted previously.
“This year’s forecast deficit is the equivalent to just over one day’s worth of global consumption so it is a balanced market,” said Cochilco’s research director Jorge Cantallopts.
This tight market will continue into 2018 when Cochilco foresees a surplus of 43,000 mt.
As a result of the tighter market, Cochilco raised its price forecast for this year and next to $2.60/lb, compared with $2.40/lb in January.
