Chilean mining firm Antofagasta sees a highly volatile copper market with a slight shortage of supply this year, the company’s CEO told Reuters, adding that any unforeseen production shocks would push up the metal’s price.
Speaking at the CRU World Copper Conference in Santiago, Antofagasta CEO Ivan Arriagada said fears of a global recession remained due to the Ukraine war and financial uncertainties, but he expected a “soft landing” as long as Chinese demand held up.
“Current supply and demand fundamentals support the price levels we are seeing today,” Arriagada said, adding that the market would be better balanced in 2024 and 2025 because new sources of production would come online.
The price of the metal used in power and construction has drifted lower in recent months to around $8 960 a tonne. It remains far above pre-Covid levels of about $6 000 a tonne but below last year’s record high of $10 845.
“We project that 2023 will have a slight deficit with very limited inventories,” Arriagada said, predicting a volatile price that will be “very sensitive” to going up with “any supply shock”, citing worker strikes or other operational challenges.
Arriagada said the firm’s $3.7-billion improvement plan for the Centinela mining area was being finalized and would then need board approval, though added it relied on clarity about the mining royalty bill currently being debated in Chile’s Congress.
“It represents a large investment and also enables a production period of more than 20 years,” Arriagada said. “Therefore, knowing the fiscal conditions that we’re making the investment in is important.”
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