Base Metals

Copper Investing

Chile expects miners in the country to sharply increase their investments over the next 10 years, with 90 percent of funds going toward copper projects.

Top copper-producing country Chile is expecting mining companies to sharply increase their investments over the next 10 years, with 90 percent of funds going toward copper projects.
An updated investment report released on Monday (August 7) by Cochilco shows forecast investments of $65 billion in the coming decade, up from the previous estimate of $49.2 billion for 2016 to 2025. The money will be spread cross 37 projects.
“We have very good news today, because the investment portfolio has grown by 32 percent, which is really important. Our country has an important geological base, but what’s more important is that we have all the conditions necessary for investment,” Aurora Williams, the country’s mining minister, said.

According to Cochilco, the report mentions 11 new investment projects that were not part of the portfolio in 2016. Those include two large copper projects that will be reactivated: the El Abra mill, a joint venture between Freeport-McMoRan (NYSE:FCX) and Chilean state copper company Codelco, and Sierra Gorda, which is controlled by Polish miner KGHM (WSE:KGH).

Other new copper projects include the $181-million debottlenecking of Mantos Copper’s Mantos Blancos mine, and the $3.5-billion NuevaUnion project, a joint venture between Teck (NYSE:TECK) and Goldcorp (TSX:G,NYSE:GG).
“The investment outlook is positive, these are projects that have a long-term view and involve a significant amount,” Chilean Economy Minister Luis Felipe Céspedes told reporters.
In 2016, despite strikes and bad weather conditions, Chile total copper output reached 5.5 million tonnes, and Cochilco forecasts total output will increase to 5.6 million tonnes this year.
A recent surge in copper prices has benefited investments in the sector, although some fear that costs will go up as in previous cycles.
“The industry learned, but it’s inevitable to think that when there’s an increase in revenue, there’s more demand for services associated with the mining industry, And with higher demand, a stable offer, costs tend to increase,” Sergio Hernandez, Cochilco’s executive vice president, told BNamericas.
On Tuesday (August 8), LME copper ended up 1 percent, at $6,480 per tonne, after touching a two-and-a-half-year high of $6,484. Prices were supported by upbeat Chinese import data.
The surge in imports from the Asian country could mean more demand and good news for Chile — together with Peru, it accounted for 55 percent of China’s total copper concentrate imports in 2016.
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Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.



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