The world’s largest copper producer reported first-half earnings this month. And there were some glimmers of hope for the wider sector.
Chile’s Codelco said that its production costs fell 3.4% during the first half of 2013, as compared to the last half of 2012.
That doesn’t sound like a big decrease. But it is significant.
The mere fact that costs have stopped rising is good news for Codelco and for the mining sector. The 2012 year had seen rapid cost escalation. Evidenced by the fact that Codelco’s H1 2013 costs–although down from the preceding six months–were still 17% higher than the first half of 2012. At $1.71 per pound.
The recent numbers are the first signs we’ve seen in quite some time of mining cost pressures starting to ease. With metals prices down, projects are getting suspended or scrapped. Bringing some sanity back to pricing for those operators still in business.
These developments in an active mining sector like Chile may mark an inflection point for the mining industry in other parts of the world. If the trend toward lower costs does continue, it will be one of the most positive developments for miners in the last few years.