Codelco is the largest supplier of red metal to the North American country,
accounting for 34% of sales, followed by BHP Chile and the Luksic Group.
By Valeria Ibarra
“I am announcing a 50% tariff on copper, which will take effect on August 1, 2025, following a solid National Security Assessment. Copper is essential for semiconductors, aircraft, ships, munitions, data centers, lithium-ion batteries, radar systems, anti-missile defense systems, and even hypersonic weapons, of which we are building many. Copper is the second most used material by the Department of Defense!”
With that message on the social network Truth Social, the President of the United States, Donald Trump, delivered the worst blow to the Chilean copper industry—an industry he had just brought into the global spotlight earlier that week by announcing these steep trade tariffs.
Following the announcement, the most active copper futures contract on Comex rose 2.1% on Thursday morning, reaching US$ 5.6 per pound, below the historic high of US$ 5.9 touched on Tuesday. In London, the three-month benchmark price on the LME rebounded after five days of losses, rising 0.5%, while the Comex premium over London reached 28%.
Chile is not only the world’s largest copper producer, accounting for 24% of global supply, but also the top supplier to the United States
Chile supplies 65% of the refined copper—which makes up nearly all copper imported by the U.S.—followed distantly by Canada (17%) and Mexico (9%), according to US Geological Survey data.
According to that federal agency, the U.S. produces 1.1 million tons of copper, but its apparent consumption is 1.8 million, forcing it to import the difference to meet industrial demand.
The Republican president lashed out at this foreign copper dependency in his message:
“Why did our ‘foolish’ (and sleepy!) leaders destroy this important industry? This 50% tariff will reverse the irresponsible behavior and stupidity of the Biden Administration. The United States will rebuild a dominant copper industry. This is, after all, our new Golden Age!”
Codelco in the spotlight
Among the companies, Codelco accounts for 34% of sales; mining operations by BHP (Escondida and Spence) account for 22%; followed by the Luksic Group with Antofagasta (17%) and El Abra, the latter controlled by Freeport McMoRan (12%), according to data from Plusmining.
Codelco, the biggest loser from the tariff hike, has major clients in the U.S. including Southwire Company, as well as Prime Material Recovery, Nexans USA, and Aurubis.
These and other companies in the sector have stressed the need for red metal as critical to construction, telecommunications, data centers, and the development of artificial intelligence.
According to Bloomberg, the market is not fully convinced that the 50% tariff will be applied universally. An exemption for a major supplier like Chile could significantly soften the blow for U.S. importers.
The U.S. media outlet Wall Street Journal cites a Morgan Stanley report raising concerns that lingered after the announcement of major tariffs on the commodity. One issue is whether the tariffs would apply to all types of copper or exclude scrap metal, as happens with aluminum tariffs. Another question raised by the report is whether any countries would be exempt. On this point, it adds:
“Chile’s total exports, for example, could meet all of the U.S. refined copper needs.”
“A statement like this deserves a closer look and a better understanding of what it actually says. I didn’t even see the word ‘cathodes,’” said Máximo Pacheco, Chairman of the Board of Codelco, referring to the potential special treatment for refined copper.
Another point is the case of Freeport McMoRan, which describes itself as “the leading copper producer in the United States,” with operations representing approximately 70% of total refined copper production in the country. It is also a fully integrated producer with smelting, refining, and rolling facilities.
The company is a partner with Codelco in El Abra, Chile, where it holds a 51% stake and has an expansion plan worth US$ 7.5 billion.
“We believe an exception will be made for Freeport McMoRan’s copper from Chile, which also has operations in Malaysia,” said a mining industry insider.
Race to stockpile
CSince the tariffs will take effect in August, the race to ship copper to the U.S. has intensified—potentially leading to supply shortages in other markets. With three weeks left before the deadline, analysts and traders said only cargoes already on ships or coming from Latin America would likely arrive in time.
“Shipments already en route to the U.S. will probably make it, meaning markets outside the U.S. should not face an immediate glut. However, it will be harder to send additional loads within a three-week window,” Morgan Stanley analysts noted.
It is also likely that Chilean producers with Chinese contracts will accelerate efforts to redirect Comex-eligible stock to the U.S. and send other brands to China, according to a Chinese copper trader who spoke to Bloomberg on condition of anonymity.
Source: Diario Financiero