‘Trade war impact on copper short-term’

SANTIAGO / Reuters

A looming trade war between the United States and China will fuel near-term volatility for copper prices, but strong demand and tight supply for the metal will bolster long-term market fundamentals, the head of Anglo-American’s copper division said in an interview.
The price of the red metal has fluctuated along with other financial commodities in recent weeks as tit-for-tat tariff threats between the world’s two largest economies have rattled markets. “We could have a bit of volatility on prices. But it’s not massive,” said Hennie Faul, Anglo American’s chief executive officer for copper. “It’s not going to impact supply or demand.”
Declining ore grades at existing mines and a lack of recent investment have crimped supply even as demand is expected to grow, Faul said. Some analysts are more cautious, noting that the copper imbalance is ebbing, and that the spike in demand from electric vehicle revolution may be less than anticipated, at least over the next few years.
“It´s not exponential,” Faul said. “It just underpins even more the fundamentals of copper as a world commodity.” The favorable outlook, he said, lent itself to productivity improvements and potential expansion at Anglo-American´s main copper interests in Chile: Los Bronces and Collahuasi. Both are among the worlds top copper deposits.
At the company´s Collahuasi mine in parched northern Chile, a joint venture with Glencore, Faul said the company would soon “sit with the other shareholders and look at ways to expand,” but that it would first need to address long-standing issues with water supply.
“The first aim is to look at where we can use technology to minimise the use of water, and Collahuasi is doing those studies,” Faul said. At Los Bronces, Anglo-American´s flagship deposit on the outskirts of Chile´s capital of Santiago, Faul said the company had successfully dealt with water and labor issues that have plagued the mine.
“We´re looking, in terms of the life of the mine, to really mitigate and take Los Bronces further down the cost curve, through productivity,” he said. The mine abuts state-run miner Codelco´s Andina deposit, and Faul said the two companies were always seeking synergies. “There´s no intention by us to take over…it´s more about being good neighbors,” he said.