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Storm clouds ahead for Chilean economy as world copper prices continue to fall

Wednesday, July 10th 2013 - 06:01 UTC
Full article 4 comments
For Chile copper accounts for roughly 60% of export revenue. For Chile copper accounts for roughly 60% of export revenue.

Chile cut its copper output forecast for the year to 5.53 million tons due to setbacks at certain mines, though production is still expected to jump from 2012 as a new deposit comes online, the mining ministry said this week.

In April, state copper commission Cochilco forecast the world number 1 copper producer's red metal output would reach 5.58 million tons this year.

The lower estimate is due to delays at Japan's JX Holdings' Caserones mine and lower forecasts for output from the Spence and Esperanza deposits, run by global miner BHP Billiton and Chilean miner Antofagasta Minerals respectively, Cochilco, according to Reuters.

But production is still seen rising in 2013 as leading copper miner Codelco's new Ministro Hales mine comes on line at the end of the year and output grows at mega mines Collahuasi and Escondida.

In 2012, Chile boosted its copper production by 3% to 5.455 million tons.

Chile is seeking to boost results at its huge, aging mines, but sliding grades, soaring costs, labour unrest and energy woes could curb its ambitious plans. Red metal output is seen climbing to 5.69 million tons next year, slightly down from Cochilco's previous forecast for 5.73 million tons.

Cochilco also cut its view for 2013 average copper prices to 3.27 dollars per lb from 3.57 due to a slowdown in top metals consumer China, the prospect of the US Federal Reserve winding down its economic stimulus program and a projected copper surplus in the period 2013-2017.

The price of copper, seen by some as a barometer for the health of the global economy, has fallen about 15% this year. Copper prices are seen slumping further next year to average 3.15 per lb, the Chilean government said, down from a previous projection for 3.32 dollars.

Categories: Economy, Politics, Latin America.

Top Comments

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  • Captain Poppy

    I still think that Chile will fair better than most of the SA countries, especially the communist bloc countries. Anyone see the Chinese crude imports? Down.....their economy is in the are they to save mercosur?

    Jul 10th, 2013 - 10:06 am 0
  • ChrisR

    1 Captain Poppy

    It seems that the Chin ruling committee are more concerned with how they can service the rising clamour for better foodstuffs, especially meat.

    They still have massive reserves and I would not be surprised if they entered into buying more major meat producing companies.

    In other words they are buying the family silver of SA.

    Jul 10th, 2013 - 11:50 am 0
  • Chicureo

    Well, it's not al that bad. Prices have been high for a long period and the Chilean government has been creating an emergency fund in case the copper market collapses. As this is an election year, we expect the major unions to go on strike and demand higher wages. Meanwhile he economy is slowing down, but still very healthy despite China being our major trading partner.

    Jul 11th, 2013 - 02:38 am 0
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