A storm in Chile has killed at least 13 people and forced Lundin Mining, Antofagasta and Codelco to halt copper operations. The disruption adds to concerns over the industry's ability to supply a metal that electricity grids, renewable energy and AI data centres all depend on.
A deadly storm in Chile threatens copper production and has added to concerns over the industry's ability to supply the metal crucial to the AI boom. The extreme weather caused flash flooding as well as heavy snow at higher altitudes, and officials say it has killed at least 13 people.
Miners suspend work at Caserones and Los Pelambres
Canadian base metals group Lundin Mining suspended operations at its Caserones copper–molybdenum operation in Chile's Atacama region last week, where heavy snowfall had disrupted power supplies. Copper miner Antofagasta paused mining and processing for several days at its Minera Los Pelambres site.
Barrick Mining, meanwhile, said on Saturday that it had safely relocated workers by helicopter from a camp in northern Chile. Snow also temporarily halted operations at state-run Codelco's major mines including El Teniente, while executives at Anglo American and BHP are monitoring the situation and in touch with Chilean authorities.
Exchange stocks fall as prices keep rising
According to the Financial Times, StoneX analyst Natalie Scott-Gray said "added supply risks like Chile are only upping the ante to copper price volatility", with copper stocks in London Metal Exchange warehouses already declining.
Last year, accidents and interruptions at major mines helped propel the copper price to a series of record highs. Prices have continued to rise in recent weeks on fears that the US could impose new copper import tariffs and as Chinese buying has picked up.
More broadly, Giuseppe Amitrano, founder of risk analysis group WieldMore Investment Management, said mining investors are increasingly trying to understand how physical climate risk translates into production disruption, cash flow, insurance costs and asset valuation. Miners typically bake some weather-related disruption into their forecasts, but doing so accurately is likely to become more challenging as weather patterns change.
Copper output was already falling before the storm
The disruption in Chile — where a state of emergency has been declared in certain regions — comes days after miners including BHP warned of declining copper production, thanks in part to ageing mines that over time contain less of the red metal. An analysis this month by Jefferies found that global copper production had fallen nearly 10% in the latest quarter compared with the same period last year, based on updates from miners that represent about a fifth of global mined copper supply.
That, Jefferies said, increased the risk of sizeable deficits in the market in the next 12 months. The International Energy Agency also warned last week of mounting difficulties in miners being able to sustain copper production at current levels in countries including Chile and Peru.
Source: Financial Times
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