About 3,200 unionized workers at Codelco’s Chuquicamata copper mine in Chile returned to the operation on Friday, ending a two-week strike that push the metal price and triggered fresh supply fears.
The mine, Codelco’s second largest by size, had been
operating at over 60% capacity during the 14-day strike, according to the state-owned
company.
BMO Capital Markets analyst Colin Hamilton estimates lost production at 7,000 tonnes, which applying a separate evaluation by Chilean mining consultant PLUSmining, adds up to $35 million.
Tanner Investments’ Felipe Valenzuela forecast a 2.8% decline in Chile’s copper output for June as a consequence of the labour action.
Analysts estimate Codelco’s lost production at 7,000 tonnes or roughly $35 million.
Mining, he says, makes up 11% of Chile’s Gross
Domestic Product (GDP), while Chuquicamata’s production — 321,000 tonnes
of copper last year — represents only 5.5% of the country’s total output.
Codelco, which last month reported an 18% year-on-year drop
in its first-quarter copper output, is in the midst of a $5.6 billion project to turn century-old
Chuquicamata into an underground mine.
The last blast at the bottom of the open pit was carried out in November, though copper extraction goes on.
The company has said it plans to gradually decrease activities
Chuquicamata’s switch is part of Codelco’s 10-year, $39
billion-overhaul of its core assets, and is expected to extend the iconic
mine’s life by at least 40 years. It will also allow the copper giant to keep
up production rates, despite falling ore grades and increasing costs at its
operations.
Annual production from “Chuqui” — as locals call it — once
it has fully transitioned to underground extraction is projected to be 320,000
tonnes of fine copper and 15,000 tonnes of molybdenum.
Codelco, which hands over all of its profits to the state,
holds vast copper deposits, accounting for 10% of the world’s known proven and
probable reserves and about 11% of the global annual copper output with 1.8
million metric tonnes of production.
Ugly trend
The world’s main copper producing nations have been showing output declines this year, according to the International Copper Study Group (ICSG).
Global production declined 2.4% in February 2019, when
compared to the same month last year, with 1,515kt (19,749ktpa) of contained
copper produced globally.
Chile led the pack with output down 7.1 % y/y to 415.9kt
(5,412ktpa) while Peru, the second main global producer, saw its output fall by
5.1% y/y to 176.1kt (2,296ktpa).