(Bloomberg) — Codelco’s first-quarter copper production and sales slumped as the world’s biggest supplier of the metal struggles to recover from a dip in ore quality and setbacks at its mines and projects in Chile.
The state-owned behemoth’s output is near the lowest level in a quarter of a century, underscoring the copper industry’s battle to maintain output as new deposits become trickier and pricier to develop. That’s fanning concern over a looming shortage as demand for the wiring metal takes off in the shift away from fossil fuels.
Codelco is attempting to get back on track at its operating mines after enduring mishaps including a rockfall, equipment malfunctions and a dam freeze. At the same time, it’s juggling four major mine overhauls in a bid to restore output toward the end of the decade. Project development is proving difficult across the industry amid logistical challenges exposed by the pandemic and exacerbated by Russia’s invasion of Ukraine.
“It’s a complex transition time, between deposits that are running out and projects that will come into operation,” Chief Executive Office Andre Sougarret said in a statement Tuesday. “But that will leave Codelco prepared for the next 50 years.”
Codelco’s wholly owned mines churned out 326,000 metric tons in the first three months of this year, down 10% from a year ago, the Santiago-based firm reported. That would put it just below annual guidance of 1.35 million to 1.42 million tons. The drop in output, lower prices and surging costs sent earnings tumbling in the quarter.
Chile, which accounts for a quarter of the world’s mined copper, has seen its output stagnate, stoking fears that global supply will be outpaced by demand for a metal that’s used in batteries, solar panels and other green technologies.