Chile’s copper miner Codelco may not regain its position as the world’s top producer of the red metal this year, as delays in upgrades and expansion projects caused by measures to stop the spread of the novel coronavirus add to the impact of low prices and lack of funding.
The miner, which hands all its revenue over to the state, was in the midst of implementing a $40 billion, 10-year modernization of its mines, aimed at maintaining output despite rapidly falling ore grades.
A sustained drop in copper prices — down 22% so far this year — and the lack of readily available government funding while the country deals with ongoing unrest, has however cast doubts on Codelco’s ability to keep up production rates.
Colin Hamilton, managing director of commodities research at BMO Capital Markets, anticipates the miner will have to sell non-core assets.
“Any thoughts of shutting unprofitable operations, however, are off the agenda for now given the need to ensure employment,” he notes.
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