Codelco, the world’s largest copper miner, described the first half of the year as “blood, sweat and tears” as its output and earnings were hit by falling prices of the metal, trade tensions, unexpected weather events and a strike.
Still, the state-owned Chilean company remains hopeful that the second half of the year will be “brilliant,” outgoing Chief Executive Officer Nelson Pizarro says during second-quarter earnings presentation.
Codelco is targeting a 30% increase in production for the second half, compared with the first, as it expects higher ore grades from Chuquicamata underground mine. NOTE: The company produced 710,000 tons from its own mines during the first half, compared with its target of 762,000 tons.Still, Codelco is starting to notice the impact of the trade war on copper demand, which could be hit “by some decimal points,” Pizarro says in Santiago. Demand should normalize within the next two years, and when it does the supply side might be challenged to catch up.Earlier this month, Codelco executives said demand from China was “quite stable” even as there were mounting signs the U.S.-China trade war was affecting global economic growth, and copper prices were lower than they had expected.In May, Codelco forecast global supply would rise 1.6% annually through 2021, trailing demand growth of 1.8% a year. Pizarro didn’t give an outlook for copper prices at the time but said price volatility driven by trade tensions was making big investment decisions more difficult.