Mining multinational Anglo American recently signed a memorandum of understanding with Codelco to create a new operating company. The reported goal of the copper market shakeup is to increase production from the two companies’ adjacent mines, both of which lie in northeastern Chile.
In a February 20 statement, London-headquartered Anglo quoted chief executive Duncan Wanblad as saying the agreement could unlock 2.7 million metric tons of additional copper production over 21 years, starting in 2030. The group added that any further capital investment will likely be minimal. Meanwhile, forecasts for net present value are at least $5 billion pre-tax, which the two companies will divide equally.
Subsidiary company Anglo American Sur and Codelco will jointly control the operating company, which will plan and optimize the processing capacity of the Los Bronces and Andina mines. In their statement, Anglo made it clear that “the resulting copper production and value generated, as well as any costs and liabilities from the joint mine plan, will be shared equally between AAS and Codelco.”
Get valuable copper market trends, price alerts, and commodity news, supporting your business in mitigating the impact of increasing metal prices. Register for MetalMiner’s free weekly newsletter.
Implications for the Copper Market
The the Los Bronces and Andina mines lie about 70 kilometers northeast of the Chilean capital Santiago. According to statements from Anglo, the combined copper from the two sites totals about 60 million metric tons, or about 2% of global reserves and resources. The company also noted that it will complete due diligence and definitive agreements in H2.
Industry watchers have continually warned of a coming copper deficit, why many feel will begin in or around 2030. Meanwhile, copper market analysts predict demand for the base metal will increase significantly, mainly due to the proliferation of battery electric vehicles and batteries for the energy sector. Sources also told MetalMiner that a lack of greenfield copper projects is yet another factor contributing to the expected supply deficit.
On February 20, copper’s 3-month price on the London Metal Exchange was $9,545 per metric ton, a two-third increase from the $5,746 seen on the same date in 2020. Data from the bourse also showed that the price achieved a high of $10,930 on May 10.
Don’t lose revenue from tariff induced price increases. Learn how to navigate volatility from tariffs by downloading MetalMiner’s free Comprehensive Steel & Aluminum Tariff Guide.
