Better prospects for the price of copper push up the value of sulfuric acid

In the long term, a surplus scenario is expected in the country.

It is one of the main inputs of the mining industry, and in some cases it can represent up to 30% of the processing costs.

Among the inputs used by mining operations to extract copper through the leaching process, there is sulfuric acid, which has experienced important periods of stress in recent years, given the lower availability of the material, which has had a strong impact on the costs of companies in the sector, especially after the increase in imports after the stoppages of national producers (as a result of compliance with the DS28 regulation).

Only this year has a price stabilization been observed, and it is expected to close in 2020 with maximums around US $ 95-100 per ton and an average close to US $ 75. However, given the positive expectations that exist for the price of copper in 2021, a new rise and a possible shortage of the product is projected.

“It will be interesting what happens in 2021, because as this situation of high prices is beginning to occur, and as many of the buyers thought that they would not need so much acid, and the trend changed, supply problems are beginning to be seen and there will be a significant demand ”, explains the executive director of Plusmining, Juan Carlos Guajardo.

The expert explains that it is a very incident input and that it can mean 30% of the costs of the production plants, but also warns of possible difficulties in transport, given the rise that maritime freight has seen since the beginning of the pandemic, and the new environmental restrictions on the most polluting fuels. Along these lines, the latest Cochilco Cost Observatory reflected a reduction in the average price of acid by 36% in the first half of 2020 compared to the first half of 2019, which generated a drop of 2.5 cents in the industry average cash cost.

“However, this may vary depending on the consumption rates of sulfuric acid at mining sites, mainly affecting the equivalent of 48% of copper production in SxEw cathodes (solvent extraction and electrowinning)”, explains the Coordinator of Strategies and Public Policies of Cochilco, Cristián Cifuentes. All in all, by 2021, a 27.8% increase in supply is expected compared to 2019, while consumption would increase by 4%, failing to change the current deficit balance scenario, which would reach 33% of consumption for next exercise.

Surplus market

In a medium-long-term analysis, Cochilco’s projections indicate that consumption would fall by 35% by 2029, while domestic supply would increase by 12% compared to 2019. Thus, the national balance by 2029 would deliver a potential surplus scenario of 718 thousand tons of sulfuric acid.

“This change will bring the complexity of what to do with that surplus and how to compete with international prices to make its commercialization competitive. Likewise, it is necessary to highlight that acid production in foundries has managed to become a cost reduction factor through its sale, therefore, by not having a safe buyer or by selling it at low prices in order to “get rid” of it. “Residue” would have a certain impact on the cost structure of our foundries, “warns Cristián Cifuentes.

Source: El Mercurio

Translated with Google Translator