According to Juan Carlos Guajardo, executive director of Plusmining, the main Chilean exporters to the US are Codelco, El Abra, BHP, and Antofagasta PLC.
By Maximiliano Villena
The announcement caught almost all actors in the copper world by surprise—government, mining companies, and markets alike. On Tuesday, President Donald Trump proposed a 50% tariff on copper imports, which caused the future value of the red metal in the US to spike 17%. However, the situation has started to calm.
“The initial reaction was surprise due to the magnitude. The market had mostly been pricing in a 25% tariff,” said Juan Carlos Guajardo, executive director of Plusmining.
On Wednesday, Comex copper trimmed the previous day’s gains and fell 2.52%, to US$5.5423 per pound—as of this edition’s close. The spot price on the London Metal Exchange (LME), where copper is traded on the spot market—unlike in the US where it’s traded as a future—also reflected the drop: according to Cochilco, spot copper closed Wednesday at US$4.37 per pound, its lowest level since May 30. On the day, it dropped 2.92%, marking the largest daily decline since April 30 (-2.99%).
So far this year, spot copper on the LME has accumulated a 10.67% gain and averaged US$4.29 per pound, 3.7% higher than during the same period last year. Amid this context, the Chilean peso rose by $7.56 compared to Tuesday’s close on the Chilean Electronic Stock Exchange, reaching a value of $950.91 per unit.
The decline in copper prices was mirrored by falling mining stocks. US-based Freeport- McMoRan, which had initially benefited from the announcement, lost 1.47% during the session. In London, Anglo American dropped 2.47%, Rio Tinto -0.81%, Glencore – 2.68%, and Chile’s Antofagasta PLC fell 2.89%.
However, Guajardo argues these fluctuations don’t indicate a panic in the market. Rather, they suggest that excessive US demand for copper may cool due to the tariffs, thus impacting prices. Still, he says the market is “more used to Donald Trump’s rhetoric now,” and there is also “a bit of skepticism” surrounding the policy.
The US is Chile’s second-largest trading partner, only behind China. Last year, exports to the US totaled US$15.528 billion, of which US$5.884 billion were from refined copper cathodes.
According to Plusmining, Chile exports between 700,000 and 800,000 tons of copper to the US, nearly all of it in cathode form. Of that, Codelco accounts for nearly one- third of sales between January and April. Then comes El Abra mine, a joint venture between Freeport and Codelco, with 12% of exports.
Next are Spence and Escondida mines—both operated by BHP—and Antofagasta PLC (through Antucoya, Centinela, and Zaldívar), each with 11%, totaling 17%. Then, Las Cenizas, a mid-sized miner, sells 5%, and the remainder comes from smaller producers. But if an undifferentiated 50% tariff on copper imports is enforced, Guajardo warns, the consequences for the US would be significant.
“If the US wants to produce the 700,000 to 800,000 tons it currently lacks, it would take about 10 years, the time it takes to develop mines and smelters. It’s a massive effort, and the ones who will pay more are US consumers, not the sellers in Chile, Canada, or Peru.”
Given this, Guajardo believes copper prices will fluctuate in the second half of the year, but they should not average below US$4 per pound. “We’ve benefited from over-demand during the first half of the year, as the US stockpiled more copper than usual. If the tariff is applied, that incentive to stockpile disappears and they’ll use what was already stored. According to some estimates, the accumulated copper in the US should last six to nine months. During that time, prices will adjust because of lower demand,” he explained.
Still, he doesn’t expect a dramatic drop, “nothing to worry about,” and forecasts a price of US$4 for the second half of the year.
In the long run, he notes, production costs have increased over the years, now hovering around US$4, factoring in permitting costs, desalination plants, and the growing influence of environmentalism, which has raised barriers and added costs to new projects.
“Another important factor: mineral exploration has delivered worse results than historical averages. The copper discovery rate has fallen, so there aren’t enough new projects—especially when copper demand is more optimistic than ever. So, the supply gap is larger,” he added.
In that context, Guajardo notes that global copper demand has historically grown by about 2.8% annually, but that has increased slightly due to the rise of renewable energy, with forecasts now exceeding 3% per year.
Fuente: La Tercera