Chile copper output falls despite strong demand

Chile's copper output has fallen despite strong global demand for the metal used in green energy and artificial intelligence data centers.

Chile accounts for about one-quarter of the world's copper supply, but production in August fell to its lowest level in 15 years. The decline has put pressure on global supplies, with prices reaching a record $14,875 a ton in September.

Juan Carlos Guajardo, founder of the Chilean consultancy Plusmining, said aging mines are a major reason for the fall. After decades of extraction, companies must process more ore to obtain the same amount of copper, requiring more investment, maintenance and technical work.

Nicolas Munoz, an analyst at London-based consultancy CRU Group, said several modernization and expansion projects have faced delays, cost overruns or technical problems. State-owned Codelco suspended expansion of the El Teniente mine after studies identified seismic risks.

Heavy rains linked to El Nino also forced mines in northern and central Chile to reduce operations in July and August by knocking out power and hampering site access. A year earlier, El Teniente suspended part of its production for months after an accident that killed six workers.

The International Energy Agency expects a 25-percent copper supply deficit by 2035 if new deposits are not developed worldwide. Guajardo said major copper clients are worried that Chile lacks a significant pipeline for increased production.

Chile's share of the global copper market has fallen from 34 percent in 2010 to about 23 percent today, according to the US Geological Survey. Finance Minister Jorge Quiroz said this month that the decline had cut at least one percentage point from Chile's GDP this year.

Guajardo and Munoz said there is no quick fix, arguing that Chile must restore production at its largest mines, advance modernization projects and develop new deposits. CRU forecasts output of about 5.5 million tons in 2027, compared with 5.27 million tons projected by the Chilean Copper Commission for this year, and up to 6 million tons by 2030 as new projects come online.