After difficult months, copper prices have finally sent out signs of life since the end of October. In the chart you can see the recently more encouraging development (in US dollars per tonne, as of 21.12.2023, 9:00 a.m.):

Source: Frankfurt Stock Exchange (Copper Price Raw Material | XC0005705501 | Price (boerse-frankfurt.de))

The reasons for the relative recovery of copper prices are, among other things, the now announced summit on interest rates, the surprisingly good economic development in China and India, supply worries due to, among other things, the problems in Panama (First Quantum) and the basic potential of copper in the context of the energy transition.

And: Many experts also assign the metal good chances for 2024 and beyond to be able to continue the turnaround. This fits in with the fact that a major copper company, Antofagasta, is now stepping on the gas.

Chile: Antofagasta builds new copper concentrator for Centinela For context: The London-based company is a mining company that focuses exclusively on Chile and mainly on copper. Antofagasta is active in the Antofagasta region in northern Chile and Central Chile. One of the locations is Centinela. This is a large sulfide and oxide ore deposit in the Antofagasta region. There the company produces, among other things, copper concentrate.

And it was precisely in this matter that Antofagasta recently announced progress. According to this, the management of the company has approved the construction of a second copper concentrator for the Centinela mine after comprehensive examination. The second plant is expected to increase the total production of the site by 170,000 tonnes of copper equivalent per year. The first work should start immediately, according to the company shortly before Christmas. The full construction is then expected to begin in the first quarter of 2024, once the final project financing has been signed. The approvals from the Chilean authorities are already in place.

Despite rising costs: Antofagasta CEO ignites copper turbo According to Antofagasta CEO Iván Arriagada, the second concentrator will start production in 2027. Specifically, the facility is expected to produce 144,000 tonnes of copper, 130,000 ounces of gold and 3,500 tonnes of molybdenum annually – over a period of 36 years. In the long term, Antofagasta wants to continue to expand the site and eventually reach a production of 900,000 tonnes of copper equivalent. That would make Centinela one of the 15 largest copper mines in the world.

However, the now approved expansion does not only refer to the concentrator plant itself. The management wants to, among other things, expand the transport system on site, build a new waste storage facility, improve energy and port infrastructure and build a new truck workshop.

In total, the project is expected to cost $4.4 billion. That is more than the company had announced in summer 2022. At that time Antofagasta had budgeted $3.7 billion. The management justifies the surcharge mainly with the now higher inflation. In addition, there is around $1 billion that is to flow into further mining development on site – i.e. into the expansion of the copper mine Encuentro, from which the new concentrator is to get the ore perspectively.

Copper company bets on sustainability Interesting: Antofagasta wants to align the new concentrator with sustainability from the start. The project will use 100% renewable energy and sea water to reduce the ecological footprint of copper. In addition, Antofagasta is considering the use of autonomous mining equipment and new technologies to reuse mine waste.

This not only allows the copper company to realize ecological but also economic advantages. According to CEO Arriagada, the expansion project is expected to deliver attractive returns that will exceed the capital costs. The basic potential is there anyway. According to the manager, there are two billion tonnes of ore reserves in the Centinela district.

My conclusion for you Copper is and remains the raw material of the future. The metal is decisive for many ecological technologies such as wind turbines, solar systems, heat pumps, electric cars and not least for the urgently needed modernization of the power grid. Accordingly, experts expect a strong increase in demand in the coming years and decades. At the same time, renowned institutes such as S&P Global warn of a global copper market deficit that could reach almost 10 million tonnes by 2035.

In my opinion, Antofagasta is hitting the nail on the head with its expansion project. Sure, the investments required for this are high and even higher than originally thought. The return perspective is correspondingly lucrative. The whole thing is rounded off by the engagements in the field of sustainability. Should Antofagasta really succeed in significantly reducing the CO2 footprint of its copper, this would of course be an important selling argument towards end customers from the automotive or wind industry.