A lot from local press in Latin America this week, discussing the future of the copper market. Where a battle seems to be shaping up between supply cuts and new projects.
The Chilean government waded into the fray yesterday — saying it won’t provide any new funding to state copper miner Codelco. All but assuring that the cash-strapped major won’t be upping production anytime soon — and may look to trim operations.
At the same time, another of Chile’s largest mines also confirmed it is reducing output — Collahuasi, operated by Anglo American and Glencore.
Chilean press reported that Collahuasi’s managers have officially delayed a planned expansion of the mine — which would have taken it to over 1 million tonnes of copper metal production annually.
The mine’s management also confirmed they are “reducing operations”, likely in reference to production cuts of 30,000 tonnes yearly that were announced in September.
All of those moves should be supportive for copper prices — given that Collahuasi produces close to 10% of Chile’s total output of the metal. But at the same time, another factor could be a big weight on the market — the start-up of a new, major mine in Peru.
That’s the Las Bambas project, operated by China’s MMG. Which Peru’s Environment Minister Manuel Pulgar-Vidal told the national congress yesterday is on track to start production early in 2016.
Doubts had been raised the last several weeks over Las Bambas — after local protests over the mine resulted in a number of deaths. But the minister dismissed concerns that this might delay the project, saying the mine is expected to be commissioned between January and March.
If this does happen, it means a lot of new supply coming to market. The Las Bambas mine is expected to produce 400,000 tonnes of copper metal annually — making it one of the largest operations in the world.
All of which makes the copper market a murky picture right now. Pick your spots carefully.