The chief executive of Antofagasta (Antofagasta), the Chilean miner, said the global economic recovery had created bottlenecks in transport and energy supplies, pushing up production costs for global miners, but he said the difficulties were expected to be temporary.
Copper prices have soared this year as demand and economic activity have rebounded from lows, but supply remains tight. Ivan Arriagada, chief executive of Antofagasta, said that despite the bottlenecks, the situation was likely to continue.
"We don't think these short-term volatility factors are sufficient to make up for the good fundamentals of the copper market," Arriagada said in an interview ahead of the LME week meeting in London.
"our assumption is that in the near future, our prices will be similar to those we see now."
Arriagada said copper prices hit $4.50 a pound at the start of the year but closed around $4.10 a pound, a level that is "more representative" of what is likely to happen in 2022.
The head of Antofagasta said that with the arrival of summer in the southern hemisphere and the decline in heating demand in Chile, energy supply problems, one of several bottlenecks, are unlikely to persist in Chile, although other problems are likely to continue.
For example, due to continuing problems with shipping costs, some of the equipment needed for the company's ongoing project has been shipped to Chile by air.
But he said it was a "one-off" situation and said he expected energy and shipping costs to fall to more normal levels next year.
"the cost pressures associated with logistics bottlenecks are, to a large extent, temporary, not. Permanent impact, "he said.
* * Climate issues * *
The London-listed miner said it risked losing 50,000 tonnes of copper production next year as a severe drought hampered its business.
But Arriagada said the desalination plant being built by its flagship project, Los Pelambres, was nearly 60 per cent complete, which could help make up for some capacity shortages. The plant is expected to start operating in the second half of 2022.
"Today, we are running climate and water availability models to improve this prediction," he said. "
He said the company would release a new forecast this month.
The political environment in Chile also keeps miners on their guard.
Arriagada said a bill to significantly raise mining taxes appeared to be moving in a "more modest" direction, and that a bill to increase restrictions on operating companies near Chilean alpine glaciers should focus on science rather than politics.
Antofagasta has maintained its long-term capital spending plan and says it hopes the uncertainty in Chile, which is rewriting its constitution, will begin to be addressed.
The company expects to make an investment decision on the upgrading of the smaller Centinela project in northern Chile in the second half of 2022 after completing the engineering design work.
"that is to say, for some time after the tax issue is discussed in the current Congress, the (.), may also be discussed in the Constituent Assembly," he said.
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