Copper
Peruvian Protests Halt Exports
August 2019
Demand for copper has softened due to slower Chinese industrial activities and higher US tariffs on imported goods. China’s manufacturing PMI rose fractionally to 49.9 in July, indicating a continuing contraction of its industry.

Anti-mining protests at ports in Peru over the last three weeks have reportedly impacted up to US$400m of copper exports and blocked supplies from reaching major mining operations in the country. Freeport-McMoRan’s Cerro Verde, MMG’s Las Bambas, Glencore’s Antapaccay and Hudbay Mineral’s Constancia copper mines have all been unable to ship concentrates from Matarani port since mid-July. Protests, which have also blocked access roads and railways, are a response to the granting of a construction license to Southern Copper for its US$1.4bn Tia Maria project. While the mines are currently stockpiling concentrate on-site, operations will soon need to be suspended if the protests continue.

Anglo American has submitted an environmental impact study for a proposed US$3bn investment in the Los Bronces copper mine in Chile, designed to maintain current production levels. The proposed Los Bronces Integrated (LBI) project will develop two new areas in the existing open pit and develop a new underground operation to replace some of the lower-grade resources currently being mined. The underground mine will target a major mineral discovery found earlier in the decade. Design of the LBI project has focused on avoiding any impact on surrounding glaciers, increasing water use or raising traffic levels. This focus has reportedly significantly added to the overall cost of the project. Anglo American operates the mine and owns 50.1%. The remainder is held by Codelco, Mitsubishi and Mitsui.

Finally, Antofagasta has sealed an early deal with Chinese smelters for copper concentrate supply in the first half of 2020, breaking away from traditional annual price benchmarking. The annual benchmarking system has a 30-year history with little exception, which includes BHP in 2011 pushing for shorter-term sales and Japanese smelters refusing the annual benchmark. Antofagasta will supply copper at US$64/tonne from January to June in 2020.

Copper prices increased in July, with Ex-Asian prices rising to US$5,933/t, from US$5,882/t in June, and Asian copper prices rose to US$6,152/t from US$5,948/t. Stocks also ticked up to 472.92kt in July, as ongoing trade tensions continue to impact on demand for copper.