Despite the price volatility of the past few years and the company’s growth projects grinding to a halt, London-listed miner Antofagasta chairperson Jean-Paul Luksic says the long-term fundamentals of copper and future demand outlook remain strong.

The miner has suspended its Los Pelambres expansion and other growth projects, in Chile, amid the coronavirus health crisis. Its operations, however, are continuing to produce copper at, or close to, their originally expected levels of production, with about two-thirds of the workforce on site.

“I continue to believe in the future of the copper industry. This means having a long-term approach to planning and a willingness to invest in new projects throughout the commodity cycle . . . ,” says Luksic.

The copper price during the first months of the year has been impacted by the uncertainty around global trade and the Covid-19 pandemic, reducing copper to a low of $2.14/lb in late March – at the peak of the virus.

Copper is currently trading slightly higher in the $2.25/lb to $2.40/lb range, but Luksic says that it is unclear how it will trade over the balance of the year given the potential for a worldwide recession.

The near-term outlook for copper demand – often viewed as a barometer for the world economy – is weak, given that the world is facing one of its most severe economic contractions in many decades.

Analysts at Fitch Solutions are forecasting global copper consumption to decline by 1.1% year-on-year in 2020, on the back of severe global demand destruction for copper from consuming sectors, including automotive, home appliances and construction.

The organisation expects the global copper market to fall into a large surplus of 344 000 t in 2020, compared with a deficit of 63 000 t in 2019. The surplus should decrease to about 161 000 t in 2021, before returning to a deficit in 2022. Fitch is forecasting a copper shortage of 51 000 t in 2022 and a shortage of 261 000 t in 2023.

Luksic stresses that the world's need for copper will continue to grow with the advancement of renewable energies and greener transportation systems, at a time when new sources of copper supply are becoming rarer.

“I believe the commodity price volatility we have experienced over the past few years highlights the strength of our company. We plan for the long term. We deliver considered growth. We manage our costs tightly. We maintain a strong balance sheet, put the safety of our people and communities at the heart of all that we do, and invest in the future. This approach will remain at the core of our strategy for the coming years,” he says.