Incoming Codelco CEO ‘optimistic’ about long-term copper price

“There is a lot of volatility at this moment because of everything that’s happening in the world, but we remain optimistic about the long-term outlook (of the copper price),” Octavio Araneda told journalists on Wednesday.

In April, Chile’s state copper commission Cochilco held its estimate for the price of copper at $3.05 per pound, rising to $3.08 for 2020 on improving prospects for growth in China.

Araneda was speaking at the official launch of Codelco’s Chuquicamata deposit as an underground mine, transformed from the world’s biggest open cast mine in a complex $5 billion-plus renovation. The upgrade seeks to maintain production at the deposit of around 320,000 tonnes per year of fine copper and 16,000 tonnes of molybdenum.

It is part of a string of upgrades Codelco is conducting on its mines around the country to maintain output despite rapidly falling ore grades.

Chilean President Sebastian Pinera said the new and improved “Chuqui,” as it is locally known, had extended its life by 40 years, and its development would help Chile keep pace with modern demands for cleaner and more productive operations.

“Modern mining faces much greater demands,” he said. “The path of Codelco is full of challenges and opportunities.”

Nelson Pizarro, Codelco’s outgoing CEO, hailed the revamped mine as “one of the most modern on the planet,” but cautioned: “The challenges are not over. The mining sector will continue to be good business only for those who are willing to transform, and up their productivity.”

He added in an interview with CNN Chile that the U.S.-China trade war appeared to have “no resolution” and would continue to place the mining industry in a “very difficult situation.”

“We will have to revise costs more, our investment processes,” he said.

The new operation at Chuquicamata will have a seven year-long start-up process that will impact on overall production from the deposit in the coming years, reaching its lowest level in 2021.

The upgrade is also yet to be completed. The belt system needed to transport the mineral to the surface will only be completed in October, while two crushing rooms will not be ready until the end of the year.

The mine’s transformation has also caused tension with workers, who downed tools for a 14-day strike in June.