In light of the imminent copper tariff promoted by Trump, mining companies in Chile have little room to maneuver—except to remain competitive and shield themselves from potential crises, warns the expert, who also comments on Codelco’s contributions to the national treasury.
By Marina Parisi
Although the price of copper is currently experiencing a “St. John’s Summer” due to advance copper purchases in the United States aimed at avoiding tariffs, Juan Carlos Guajardo asserts that this is a temporary scenario. How does the expert foresee copper market fundamentals evolving? Guajardo shares his projections and his view on Codelco in the following interview.
On March 26, copper reached a record price of US$5.37 per pound. What explains this sharp increase?
The recent increase in copper prices over the past few weeks is primarily due to interest from U.S. buyers looking to make advance purchases to avoid potential tariffs that may be imposed in the coming days or weeks.
This anticipatory demand has created upward pressure on prices, which can indeed be seen as a transitory situation, although market fundamentals remain positive.
The concentration of purchases on certain days—purchases that otherwise would have been spread throughout the year—has temporarily driven prices higher.
Are copper market fundamentals still solid despite Trump’s measures?
Copper market fundamentals are indeed positive due to expectations of increased copper consumption, driven by the global economic shift toward energy transition. Additionally, mining companies have not developed new projects at a sufficient pace to meet this rising demand.
Therefore, beyond the ups and downs of the tariff situation, it is reasonable to expect a positive long-term outlook for the copper market.
What strategy should Codelco and other mining companies follow to offset the tariff impact?
Mining companies can do little regarding the tariff situation, other than remaining competitive producers in order to be safeguarded in the event of a crisis. The lowest-cost commodity producers will always be better equipped to withstand crises than those with higher costs.
Speaking of Codelco, what explains the increase in its contribution to the national treasury at the end of 2024 (US$1.534 billion), compared to a lower contribution in 2023 (US$1.436 billion)?
The increase in Codelco’s contribution to the treasury is mainly explained by the rise in copper prices, as well as a slight reduction in production costs.
And the US$22.2 billion debt the company is currently carrying—doesn’t that affect its ability to contribute to the State?
Codelco’s high level of debt, which is expected to continue growing, has led to an increase in interest payments that are becoming a heavier burden on the company’s financial statements each year. This could certainly affect the company’s contribution to the State.
However, as long as copper prices remain high, this situation can continue to be managed without impacting Codelco’s total fiscal contribution.
Source: Reporte Minero