Codelco warns Chile’s copper output may stall at 5.5Mtpa

[Ben Graham]

Chile’s state-owned copper giant Codelco is warning that national production could stagnate at about 5.5 million tonnes per year as the industry faces mounting challenges.

Chairman Máximo Pacheco said at the Ecos de la Minería summit in Santiago the sector faces “enormous difficulties,” citing deeper mining operations, falling ore grades and rising costs. Chile is the world’s top copper supplier, and a prolonged plateau in output could tighten global markets just as demand from the energy transition accelerates.

Despite the challenges, Pacheco said Codelco is pressing ahead with upgrades and new ventures. He confirmed the company remains committed to a lithium partnership with SQM in the Salar de Atacama. He also said an exploration agreement with BHP (ASX: BHP) for the Anillo copper project will be signed this week, while a joint mining plan with Anglo American (LON: AAL) could be finalized in the coming weeks.

SQM President Gina Ocqueteau told local paper La Tercera she is optimistic the deal with Codelco will be ratified before Chile’s next government takes office in March. She noted the partnership’s details could be finalized sooner but warned delays would postpone revenues needed for government projects.

Two hurdles remain before the lithium deal can be sealed: completion of an indigenous consultation process and approval from China’s antitrust regulator, SAMR. Ocqueteau said the consultation, led by state agency Corfo, is well advanced. On SAMR, she noted “good news and a growing sentiment” but acknowledged concerns in Beijing over global lithium supply.

Awaiting minister’s blessing

Chile’s Energy and Mining Minister Aurora Williams confirmed the special contract underpinning the SQM-Codelco venture has already cleared reviews by the Comptroller General and state copper agency Cochilco. “The only thing left for us to do is sign it,” she said.

The contract sets terms for exploration, exploitation, environmental safeguards and economic conditions. It is slated to give Codelco majority control of SQM’s lithium production in northern Chile. If approved, it would cement a landmark partnership in one of the world’s most strategic lithium assets.

Some presidential contenders have said they would review the deal or scrap it altogether if it does not come through before President Gabriel Boric leaves office, putting pressure on his administration to finalize the key pillar of its vow to boost the state’s role in lithium production.