Chile to Build New Copper Smelter Despite Low Global Treatment Charges

Chile to build new 800,000-tonne copper smelter to maintain its position as a major producer amid surging global demand driven by electrification.

Olalekan Adigun
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Chile to Build New Copper Smelter Despite Low Global Treatment Charges

Chile to Build New Copper Smelter Despite Low Global Treatment Charges

On April 18, 2024, Chile's mining minister Aurora Williams announced the government's plan to build a new 800,000-tonne capacity copper smelter in Paipote, Atacama region. The new smelter will replace the recently closed Hernan Videla Lira and Ventanas smelters and help maintain Chile's position as a major copper producer. The decision to construct the smelter comes despite record-low global treatment and refining charges for copper concentrate.

The closure of the older smelters had reduced Chile's smelting capacity, prompting the government to take action. Minister Williams stated that the new smelter will more than cover the missing capacity from the two closed facilities. The Chilean government is open to working with the private sector to involve their capital and technology in the project.

The announcement comes amid a surge in copper prices, which have reached around US$10,000 per tonne. Copper is considered a leading indicator of economic health, and the global copper market is expected to face a supply deficit of up to 6 million tonnes by 2030 due to rising demand driven by the global electrification phase. Analysts predict that copper prices could reach US$15,000 per tonne in the next two years, barring a recession.

Why this matters: The construction of the new smelter is essential for Chile to maintain its position as a major copper producer and meet the growing global demand for the metal. The project also highlights the government's commitment to supporting the country's mining industry, which is a key driver of economic growth.

The move to build the new smelter comes amid a bullish trend in copper demand, driven by global electrification efforts and the shift towards net-zero emissions. Analysts project that annual copper demand will increase to 36.6 million tonnes by 2031, up from 25 million tonnes currently, while projected supplies are only expected to reach 30.1 million tonnes, creating a significant gap. Major mining companies are responding to this imbalance by diversifying their sources and securing copper from more stable regions through acquisitions and mergers.

Minister Williams emphasized that the industry will need to prioritize the development of new mining projects and enhance the efficiency of existing operations to meet the growing demand and achieve global climate targets. The Chilean government's decision to construct the new smelter in Paipote is a significant step towards addressing the supply-demand gap</

Key Takeaways

  • Chile to build 800,000-tonne copper smelter in Paipote to replace closed facilities.
  • New smelter to help maintain Chile's position as major copper producer amid rising demand.
  • Copper prices surging, expected to reach $15,000/tonne in 2 years due to electrification.
  • Global copper demand projected to rise to 36.6MT by 2031, exceeding 30.1MT supply.
  • Chile's mining industry key to meeting growing copper demand and climate targets.