CALAMA – Copper prices will not suffer significantly from what is expected to be a modest global surplus next year, the CEO of the world's No 1 producer of the metal told Reuters on Tuesday.

"We're expecting that we'll surely have a small metal surplus, but at relatively modest levels," Thomas Keller, CEO of Chile's Codelco, said at the Ministro Hales mine project near the city of Calama in the nation's mineral-rich north.

World demand for the red metal has exceeded supply since the global financial crisis, but increased output from new and existing mines has been expected to reverse that trend from 2013.

Analysts expect the global copper market to post a surplus of 182 000 t this year, up from a previous forecast of 153 000 t, and then balloon to a 328 000 t surplus in 2014, according to a Reuters poll last month.

Copper has traded in London at $7 000/t to $7 420/t since early August, held back by swelling supply and slower demand growth in China.

"Prices are moving in a range that is to be expected given the market conditions," Keller said.

MINISTRO HALES TO BOLSTER OUTPUT

Codelco is in the midst of an ambitious investment plan to boost output in its massive but tired mines. The company's production in 2012 fell to its lowest level since 2008, although it was more stable in the first half of this year.

Keller has said Codelco expects output for 2013 as a whole to come in slightly ahead of last year, when it produced roughly 1.65-million tonnes, excluding the El Abra and Anglo American Sur operations.

The miner's roughly $3-billion Ministro Hales mine, slated to reach full production during the first half of next year, is poised to help counteract declining ore grades in Codelco's other mines.

"This year I think we'll produce 30 000 t of copper...at Ministro Hales," Keller told reporters on site. "That will help us partially offset the production drop in deposits that are becoming exhausted, such as El Salvador and Chuquicamata."

The deposit is forecast to produce roughly 180 000 t/y of copper . Silver will also be mined at Ministro Hales, allowing Codelco to become one of the world's top ten silver producers, Keller added.