Codelco to cut operations amid Chilean state of emergency

Chilean copper miner Codelco will reduce its operations to comply with a state of emergency announced by the government in an attempt to curb the spread of the novel coronavirus (2019-nCoV), the state-owned company said on Wednesday March 18.

Codelco, which is the world’s largest copper producer, said it would maintain “operational continuity” for a 15-day period from March 19 across all its units to reduce the number of workers required on site, in accordance with government-imposed restrictions on movement.
“All of our workers commute day by day, using different modes of transportation, and are exposed to sources of infection,” Codelco said. "The mining industry must adhere to the political and sanitary actions taken [by the government]."
The company added that it will monitor the situation daily and take necessary measures to ensure its facilities are able to resume normal operations as soon as is allowed.
Chile and Peru have both declared a state of emergency and are restricting travel among their citizens to try and contain the spread of the coronavirus. Some Peruvian mines have already trimmed output or were put under care and maintenance earlier this week.
Codelco produced 1.71 million tonnes in copper content in 2019, down by 5.6% from 1.81 million tonnes a year before. It accounted for 30% of Chile's total output during that period.
Also on Wednesday, union workers at BHP’s Escondida copper mine, the world’s largest, urged the mine’s management to implement stricter measures to prevent the spread of the coronavirus. The union said it would resort to federal authorities or legal measures if the request was not granted.
"The Chilean government has guaranteed foreign trade will continue as normal and Chilean ports are working as usual," one Chile-based miner source told Fastmarkets. "The workers, on the other hand, could decide to stop working [through union decisions], which would complicate the scenario."
"I think it's a tough choice. On one hand, the coronavirus outbreak is a serious matter. On the other, mining companies don't want to cut production as it would increase costs, especially at today's prices," the miner source added.
Potential supply shortages come at a time when treatment and refining charges (TC/RCs) were at a one-year high amid reduced demand from Chinese smelters - also a result of the coronavirus pandemic.
Fastmarkets’ copper concentrates TC index, cif Asia Pacific was at $68 per tonne on March 13, up from $66.40 per tonne a week earlier.
Felipe Peroni in São Paulo contributed to this report.

Renato Rostás

renato.rostas@fastmarkets.com

Published

Renato Rostás

March 19, 2020

03:41 GMT

São Paulo