Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
Chilean copper miner Codelco said on Wednesday it would reduce its operations to comply with a state of catastrophe announced by the government in a bid to curb the spread of coronavirus.
The miner, the world’s biggest of the precious red metal, said it would maintain “operational continuity” for a period of 15 days from March 19.
Codelco in a statement acknowledged the risk of the “economic impact” for workers, contractors, the state-owned company and the country. Copper mining has accounted for an average of 10% of Chile’s gross domestic product (GDP) for the last two decades.
But it said that the state of catastrophe announced by government imposed strict limits on movement and left it with no choice but to curtail its operations.
Copper mining has accounted for an average of 10% of Chile’s GDP for the last two decades
“All the workers of our operations who are in transit day after day by various means of transportation are exposed to sources of contagion,” it said. “This situation makes it necessary to take additional measures to minimize this exposure.”
The company said it would be “permanently evaluating” how to return to normal operations, “without prejudice to other resolutions that may come from the authorities”.
Chile has so far seen 238 confirmed cases of coronavirus since the first was certified on March 3, but no deaths.
The move by Codelco comes as London copper prices on Wednesday fell below $5,000 a tonne for the first time since November 2016.
Chile’s mines minister Baldo Prokurica said the low price — due to the softening of demand from China, where the coronavirus originated — was “a major blow” for Chilean mining.
“For every penny of the metal that falls, the Chilean state loses US $60 million,” he said on Wednesday.
He urged calm however, pointing to the unusual confluence of circumstances. “This is a complex, difficult, but temporary situation,” he said.
Chile is home to operations run by BHP, Anglo American Plc, Glencore Plc, Freeport-McMoRan Inc and Antofagasta Plc, some of whom have already announced strict virus-control measures at their sites.
Earlier on Wednesday, unionized workers at BHP’s Escondida copper mine, the world’s largest, said they would ask authorities to shut down the mine unless management begins to implement stricter measures to prevent the spread of the coronavirus.
The union said in a statement its members were particularly exposed to the virus given the often tight quarters at mine facilities and frequent travel from disparate parts of Chile.
(By Aislinn Laing; Editing by Chris Reese and Sam Holmes)
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