What copper-producing mines have been affected by COVID-19 measures and what could that mean for supply in 2020? Find out here.
The uncertainty brought by the coronavirus outbreak has continued to hit the copper market, with prices falling significantly while miners step up their response to slow down the spread of the novel virus.
This year’s supply might suffer as a result, with countries also imposing restrictions on operations around the world to fight the virus. Last year, copper production reached 20 million tonnes, down slightly from 2018’s 20.4 million tonnes, according to the US Geological Survey.
Ryan Cochrane of Open Mineral told the Investing News Network (INN) the picture is changing very quickly, and numerous major operations are reducing workforces, delaying construction or ramp up activities, and a fair amount of smaller operations have been placed on care and maintenance.
“The disruptions are expected to be at least a month, but probably longer, which will have a major effect on supply in 2020,” he said on March 31. “Clear indications of the effect of supply disruptions are being seen on the spot TCRC market, where terms have been falling quickly over the past few weeks.”
The strict measures by governments paired up with falling copper prices pose significant risks to global mine supply and project development, according to a report from Wood Mackenzie Research Director Nick Pickens.
“At this stage, we are not assuming mine supply from these countries will stop in its entirety. However, we believe there is a significant risk that disruptions will escalate, and breach 5 percent this year,” he said.
But for Kieran Clancy of Capital Economics the cutbacks to supply that have been announced (so far) won’t come close to offsetting the enormous virus-related hit to copper demand.
“Undoubtedly the key thing to watch is any signs that virus containment measures across the world are starting to be relaxed,” he told the Investing News Network on April 1. “Until then, copper demand will remain almost non-existent.”
For copper-focused investors wanting to keep up with the latest copper-producing operations being impacted by the COVID-19 outbreak, the Investing News Network put the below list of mines affected by the virus and those that haven’t seen material changes as of yet.
All news and data were current as of April 1, 2020. This article will be updated as new information becomes available — if you know of a copper producing mine that has been disrupted or not due to COVID-19 but is not listed, please email firstname.lastname@example.org.
Copper mines and COVID-19: Production affected
2019 production: 1 billion pounds
Following a national quarantine imposed by the Peruvian government, Freeport McMoRan (NYSE:FCX) temporarily suspended its Cerro Verde copper-molybdenum mining complex in the South American country on March 17. Last year, Cerro Verde produced 1 billion pounds of copper and 29 million pounds of molybdenum.
Peru has extended the measures until April 12, prompting Freeport to engage in discussions with authorities regarding health protocols which would enable Cerro Verde to conduct limited operations during the state of emergency, the company said on March 26.
Cerro Verde concentrating operations averaged 396,800 metric tons of ore per day in fourth-quarter 2019, approximately 10 percent above design capacity. The company said in its yearly report that it was looking to increase production to 420,000 metric tons of ore per day in 2021.
2019 production: 113,825 tonnes
As a result of the government measures imposed by Peru mentioned earlier, Hudbay Minerals (NYSE:HBM) has temporarily shut its massive Constancia copper mine in the country as of March 20. The company also expects the government processes related to Consulta Previa and permitting applications to be deferred during this state of emergency.
“A smaller workforce has been maintained at Constancia to oversee critical aspects of the operation, with the overarching goal of facilitating a quick and efficient ramp up back to normal levels once the regional situation improves,” the company said on March 30.
Constancia produced a total of 113,825 tonnes of copper and 55,505 ounces of precious metals in 2019. Its guidance for 2020 is set at 80,000 to 95,000 tonnes of copper and 45,000 to 55,000 ounces of precious metals.
2019 production: 382,518 tonnes
Las Bambas, another mine located in Peru, is operated by MMG (ASX:MMG,HKEX:1208), which on March 19 said that it has temporarily reduced operations and has begun the process to reduce employees and contractor levels at site.
MMG said the transport of concentrates and critical supplies from Las Bambas, which accounts for nearly a fifth of Peru’s entire copper output, would be significantly restricted while operations were temporarily reduced.
The company expects to produce between 418,000 and 445,000 tonnes of copper in 2020, with Las Bambas now expected to deliver around 2 million tonnes of copper production from 2021 to 2025.
2019 production: 335,000 tonnes
On March 19, Anglo American (LSE:AAL,OTCQX:AAUKF) said it would reduce operations at its Los Bronces copper mine in Chile to the minimum necessary to ensure “operational continuity” due to the spread of the coronavirus in the South American nation. Impact on output is expected to be minimal as the company plans to continue processing stockpiled copper.
In 2019, Los Bronces production decreased by 9 percent to 335,000 tonnes, with planned higher grades offset by production losses owing to lower water availability, the company said. Anglo American’s total copper production guidance for 2020 is set at 620,000 to 670,000 tonnes.
2019 production: 25,000 tonnes
Brazilian miner Vale (NYSE:VALE) said on March 17 it will place its Voisey’s Bay copper mine into care and maintenance for four weeks to protect nearby indigenous communities from the virus outbreak. Copper concentrate from the mine was around 25,000 tonnes last year, a 2.7 percent lower than in 2018.
Copper mines and COVID-19: No material impact yet
2019 production: 459,744 tonnes
Chilean copper miner Codelco said it was taking measures and had put in place a plan to scale down operations to comply with a national state of emergency announced by the government. The miner also confirmed to Reuters that sales and shipments of copper had not yet been impacted by the spread of coronavirus.
Last year, the company outlined a 10-year, US$40-billion plan to boost output as falling ore grades have impacted its copper mines’ production. Codelco plans to boost El Teniente production to 500,000 tonnes per year by 2025, with the facility undergoing an extensive US$3.4 billion expansion to extend its productive life by 50 years.
Codelco, one of the world’s largest copper producers, had an output of 1.59 million tonnes of copper in 2019 from its wholly-owned mines. The company operates four mines and seven smelters, all in Chile.
2019 production: 1,135,000 tonnes
Mining giant BHP (ASX:BHP,NYSE:BHP,LSE:BLT) operates the world’s largest copper mine, Escondida, also in Chile. In an effort to reduce the spread of the novel coronavirus, the global miner said on March 22 that it will exclude contractors from its Chile copper mines for 15 days.
“As things currently stand, there have been no material impacts on our operations or supply chain with our workforce able to access our mines and platforms safely and operate effectively,” it said.
BHP expects production of between 1,160,000 and 1,230,000 tonnes for FY2020, reflecting a further uplift in ore milled and higher recoveries at the cathode process.
2019 production: 565,454 tonnes
To date, there have been no material disruptions at Glencore’s (LSE:GLEN) Collahuasi operations. The Swiss miner owns a 44 percent stake in Collahuasi, the same interest owned by Anglo American, with the rest 12 percent owned by Japan Collahuasi Resources.
Glencore continues to closely monitor and respond to events surrounding the COVID-19 pandemic, and has introduced a number of additional precautionary measures across our offices and industrial assets. The company has experienced an impact on certain smaller operations where governments have imposed restrictions.
Southern Copper (NYSE:SCCO) operates the Buenavista mine in Sonora, Mexico, where the government has recently mandated that all non-essential businesses, including mining, temporarily suspend operations until April 30 due to the COVID-19 outbreak. The company has not released any news of material impact in production levels yet.
2019 production: 460,420 tonnes
Operated by Teck Resources (TSX:TECK.A), Antamina, one of the world’s largest copper and zinc mines, is located in Peru, which as mentioned above has implemented prevention measures to avoid a further spread of COVID-19. BHP, Glencore and Mitsubishi (TSE:8058) also own a stake in the asset.
In its Q1 2020 update, Teck Resources said Antamina continues to operate at full production levels with less than half of the normal workforce. Given the high degree of uncertainty associated with the current COVID-19 situation, the company has withdrawn its guidance for the current year on slowdown of production and workforce reductions. Teck’s share of copper production guidance at Antamina was previously expected to reach 88,000 to 92,000 tonnes.
KGHM Polska Miedz
2019 production: 399,000 tonnes
Polish state-run firm KGHM hasn’t seen any impact from the coronavirus on its output and sales at the moment. However, it would consider asking the state for support if needed, the company said on March 18.
On March 30, Prime Minister Mateusz Morawiecki said the company is currently operating below its break-even point with the copper price below US$5,000 per tonne.
Centinela, Los Pelambres, Antucoya and Zaldivar
2019 combined production: 770,000 tonnes
Chile’s copper miner Antofagasta (LSE:ANTO,OTC Pink:ANFGF) operates the Centinela, Los Pelambres, Antucoya and Zaldivar mines in the South American country. As part of its actions to prevent or slow the spread of COVID-19 the company has decided to reduce the number of employees and contractors working at the Los Pelambres expansion project and the company’s operations, with critical employees remaining at work to ensure production continues unaffected.
Antofagasta expects capital expenditure in 2020 to be in the range of US$1.3 to 1.5 billion compared to US$1.5 billion previously announced.
The Chilean miner produced 770,000 metric tons of copper in 2019, compared with 725,300 metric tons in 2018, due to higher production at its Los Pelambres, Centinela and Zaldivar mines. The company has kept its 2020 target at a range of 725,000 to 755,000 tonnes.
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Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.