Codelco, Chile's national copper company, recently reported a 50.4 per cent drop in pre-tax profit to $2.606bn in the January-September period, hit by falling copper prices and lower production at some of its mines. Codelco is the world's largest copper producer.
Codelco said the selling price of copper was down a significant 12 per cent compared with last year. This is an important reason for the company's falling profits.
Codelco produced 1.06m tonnes of copper in the first three quarters, down 10 per cent from the same period last year. Codelco said the decline was related to lower ore grades at its MinistroHales copper mine. In addition, production was affected by lower ore grade, activity and recovery rates at the Chuquicamata and ElTeniente copper mines, as well as operational difficulties at the Chuquicamata smelter.
Codelco added that the smelter at Chuquicamata will undergo major maintenance in November, which will lead to further operational problems.
Codelco cut its full-year copper production forecast to 1.435-1.465 million tonnes this year, down from an August estimate of 1.495-1.51 million tonnes. The company said its production costs rose 21.2 percent to $1.574 a pound, up from $1.299 a pound a year earlier, due to lower copper output and higher supply costs.
Copper prices have languished recently, falling more than 20 per cent since the start of the year on fears of a global recession and the impact of a strong US dollar. With its wide range of industrial and construction uses, copper prices are often seen as a bellwether of economic activity.
However, analysts and mining companies are bullish about the future of copper prices. In a report last month, market researcher FitchSolutions said the copper market was in a small supply surplus this year but would see a widening gap from 2023, peaking at about 9m tonnes in 2030, driven by consumption related to the green transition.
Mining giant BHP Billiton made a similar point, arguing that electrification could significantly improve the outlook for copper prices from around 2025.
