SMM, Nov. 20: Fitch said in a report that Chile will achieve a steady production growth of 4 percent next year because the risk of labor strikes will be reduced and mines will escalate, warning that The decline in ore grade poses a downward risk to its long-term prediction.
In addition, production at the Escondida copper mine, jointly owned by BHP Billiton, Rio Tinto, Jeco and Jeco 2, has not been affected by this year's miners' strike and commissioned a new concentrator in September 2017, which helped to increase production in 2018.
Despite the decline in ore grade, Codelco2018 copper production increased slightly in the first half of the year, up 2.8 per cent from the first half of 2017.
Fitch stressed that the new Chuquicamata underground mine will support Codelco's copper production level. The underground part of the mine will initially increase land production in Chuquicamata, as the mine will shift to underground operations within the next decade.
"the current plan predicts that it will take seven years of growth before full production can be achieved. Once fully operational, the underground portion will produce 320000 tons of copper a year.
In addition, Fitch reported that the Michilla mine, owned by Haldeman Mining and to be restarted, showed an improvement in investor interest in Chilean mines. The mine will be restarted in 2019 and, as a medium-sized mine, will produce 170000 tons over the next decade.
Antofagasta increased its copper production guidance from 705000 tons to 72.5 tons in 2018 to 750000 to 790000 tons by 2019, and is expected to improve the ore grade of its Centinela and Zaldivar mines. Unlike most miners, they see a decline in ore grade.
Mines that have seen production decline in recent quarters say the decline in ore grade is one of the main factors. Chile's national average ore grade has declined steadily over the past decade.
"as ore grades decline, more copper ores need to be processed to achieve the same level of copper concentrate production. This issue provides an attractive opportunity for miners to invest in new technologies or upgrade equipment to improve operational efficiency, "Fitch said.
In terms of labour unrest, Fitch expects the miners' strike to affect copper production in 2019. Chilean Copper Mine Company received a number of threats of strike by miners over contract disputes in 2018, which was legislated in 2017 to give miners more negotiating power. For this reason, many contracts have been negotiated and agreed, some of which are valid for 36 months, so Fitch believes that miners have less chance of going on strike in 2019.
