SMM11 September 9-Chilean Copper Association Cochilco data show that San Diego-based Codelco three quarters of copper production is the lowest this year. All of its mines fell in September as ore grades fell by an average of 5 per cent in the first nine months of the year. The decline in copper grades has exacerbated supply problems.
Commodity prices ended plummeting in 2016, but still unnerved miners about expanding their business in Chile. Chile is the world's largest supplier of copper. At the same time, rising trade tensions are prompting mining companies to delay the expansion of large mining projects because of uncertainty about the demand outlook.
(International Copper Study Group), an international copper research group, expects a shortfall of 90,000 tons of copper this year, more than double the April forecast.
The lower grades were partly offset by a 2 per cent increase in metal recovery, but production in the first nine months of the year was still 41000 tons lower than in 2017, Codelco said in an email in response to questions from reporters.
"companies need to protect themselves before they launch investment plans to expand production capacity and ease the decline in ore grades," Cesar Perez-Novoa, an analyst at BTG Pactual, said by telephone on Thursday. Otherwise, resource consumption will be high over the next decade.
Perez-Novoa said Codelco would invest $36 billion over the next decade to upgrade its ageing copper mine to make up for the decline in copper grade and maintain current production levels.
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