Chile Protests Threaten to Dethrone World’s Top Copper Producer – by Laura Millan Lombrana (Bloomberg News – November 27, 2019)

Codelco’s standing as the world’s top copper producer is increasingly at risk in the wake of a citizen uprising that is shaking Chile to its core.

Codelco planned to spend US$20 billion over a decade to modernize its aging mines and hold off a looming production slump. But protests that have sent millions into the street to demand changes in everything from pensions and health care to education could jeopardize the state-owned miner’s push for needed government funding.

The alternatives are largely unappealing. The company could delay the work, but its costs for processing lower-quality ore from aging mines is growing. It could boost borrowing, but its debt already sits at a record high. The bottom line: Without government funding, the company that now produces about 8 per cent of global copper may soon find itself slipping from its top spot, according to Colin Hamilton at BMO Capital Markets.

“Targeting flat production is optimistic,” said Hamilton, who is BMO’s managing director of commodities research. “Codelco might not be the world’s largest copper miner in three to four years. Short term, there are other priorities for the government.”

Codelco, or more formally Corporacion Nacional del Cobre de Chile, reports third-quarter earnings at the end of this week, when it’s expected to face new questioning about its upgrade plans in light of the protests.

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