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Chile’s Codelco, the world’s largest copper miner expects copper demand in China, its main consumer, to be resilient, despite slower economic growth there, its Chairman Maximo Pacheco told Reuters.
China buys about half of Codelco’s production and also accounts for about half of global copper consumption, which analysts estimate will be around 25 million tonnes this year.
Pacheco said he was “very confident about China’s economy”, adding the other half of Codelco’s production went to other Asian countries, Europe and South America.
Covid lockdowns, a prolonged property slump and global recession have limited China’s growth.
Asked about the London Metal Exchange’s consultation of the metals industry on its possible ban of Russian aluminum, copper and nickel from being traded and stored in its system, Pacheco said Codelco would not get involved.
The West has placed sanctions on Russian energy companies after Moscow invaded Ukraine at the end of February. There are no sanctions on metal producers, but some buyers are worried that unsold Russian metal will go into the LME system because producers cannot sell it.
“We will follow the discussion, but we are not a part of the decision,” Pacheco said, without giving further details on why the company would not take a position.
While other major players have also avoided comment, US-based aluminum producer Alcoa has supported the idea of blocking Russian imports.
Apart from leading global copper production, Chile is the world’s second largest lithium producer.
But while state-run Codelco dominates copper mining, the state has yet to produce lithium, leaving private companies Albemarle Corp and SQM to lead its domestic industry.
Pacheco said lithium mining needed to be discussed once a state-owned enterprise is created or Codelco itself has developed the expertise.
Codelco in March started lithium exploration in the Salar de Maricunga region, and Chile’s government has said it will establish a state firm to mine the ultra-light metal used to make electric car batteries.
Codelco faces challenges linked to the redevelopment of its copper mines that mean it will produce 1.5 million tonnes of copper this year and next, compared with 1.7 million tonnes in 2021.
“We will probably go back to that level (1.7 million tonnes) in four years’ time,” Pacheco said.
He said some of the challenges were operational and that water shortages were a problem, especially in the north of Chile.
In addition, the company had to contend with supply chain bottlenecks, he said, although Codelco’s mines maintained operations during covid lockdowns.
Pacheco said Codelco would spend $3.5 billion this year on its mine redevelopment projects and the same amount next year, up from $2.5 billion last year.
(By Pratima Desai and Clara Denina; Editing by Barbara Lewis)
Read more: Copper buyers want longer-term deals on supply concerns, Codelco says
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