The development could boost downstream consumption, which was halted for months due to the recent covid-19 outbreak.
Copper for delivery in July rose more than 5% from Wednesday’s settlement, touching $4.5575 per pound ($10,050 per tonne) lunchtime Thursday on the Comex market in New York.
Click here for an interactive chart of copper prices
On the supply side, Chile’s copper production fell in April, government body Cochilco said on Thursday, with state-owned giant Codelco seeing output down 6.1% year-on-year to 116,000 tonnes and Collahuasi’s production dropping by a sharp 26.5%.
Chile’s environmental regulator initiated a sanction process against Antofagasta Minerals’ Los Pelambres copper mine for deficiencies associated with tailings management, the agency said in a statement released on Wednesday.
The company said it is reviewing the scope of the sanctioning process to determine its next steps.
Serious infractions could mean a loss of the mine’s environmental permit, closure, or a fine. Minor infractions can result in a written warning or a fine. In this case, the maximum fine could reach 7.5 billion Chilean pesos ($9 million). The mine produced 324,700 tonnes of copper last year.
Meanwhile, the world’s No. 2 copper producer Peru is suffering increasingly violent community protests against mines, as communities demand higher benefits from the industry.
Two fires broke out at key copper projects this week, hitting MMG Ltd’s Las Bambas copper mine and Southern Copper Corp’s planned Los Chancas project, amid escalating local protests.
Supply to outpace demand next year
Global copper supply will outpace demand over the next two years, helped by several upcoming large mine projects, RBC Capital Markets analysts said on Wednesday.
The brokerage in a note said it expects the industrial metal’s price to be at $4.32 per pound in 2022, and then drop to $3.75 in 2023 and 2024 on a “small” surplus in the market.
Large untapped copper mining projects like Quellaveco in Peru, Timok in Serbia, and Quebrada Blanca Phase 2 in Chile are set to begin production in mid-2022 and in early 2023, normalizing demand growth.
“Slowing demand and new supply could balance the market in 2023, while the medium-term outlook remains positive,” RBC said.
(With files from Bloomberg and Reuters)
