The decline in the copper price accelerated on Wednesday, as pandemic fears grip global markets and mining companies announce a wave of production halts and project construction suspensions.
Copper trading in New York fell by as much as 8.8% to US$2.11 per lb. (US$4,650 a tonne), the weakest level since October 2016. The copper price is now down more than 25% from its 2020 high, near the end of January.
Across South America, where the bulk of the world’s copper is produced, countries such as Argentina, Peru and Chile have closed borders or imposed restrictions to contain the outbreak on the continent.
Copper mining stocks declined sharply, led by top U.S. producer Freeport-McMoRan (NYSE: FCX), which fell by nearly 25% before attracting some buying towards the end of the day.
The Phoenix, Arizona-based company said it is suspending operations at its Cerro Verde mine in Peru for at least 15 days. Freeport owns 53.6% of Cerro Verde and operates one of the world’s largest concentrating facilities near Arequipa, Peru.
Last year, Cerro Verde produced 1 billion lb. copper (450,000 tonnes) and 29 million lb. molybdenum (130,000 tonnes), positioning it as one of the top-three copper mines worldwide. Freeport produced 3.25 billion lb. copper (1.47 million tonnes) in 2019, and before the outbreak was projecting growth to 3.5 billion lb. (1.59 million tonnes) this year.
Canadian diversified miner Teck Resources (TSX: TECK.B; NYSE: TECK) announced on March 18 that it’s halting construction of the Quebrada Blanca Phase 2 project in Chile, which requires a US$4.7 billion capital outlay. Teck shares were trading 24% lower in New York.
On March 17, Anglo American (LSE: AAL) announced that it will slow the building of its US$5 billion Quellaveco project in Peru. Quellaveco is expected to start production in 2022, with annual output of around 300,000 tonnes. Shares in Anglo lost 18.6% of their value. Copper accounts for a fifth of Anglo American’s earnings.
Reuters news agency reported that unionized workers at the Escondida mine in Chile, the world’s largest copper mine, with output of 1.2 million tonnes per year, requested on March 17 a halt to operations unless management begins to implement stricter health and safety measures.
Escondida is operated by Melbourne-based BHP Group (NYSE: BHP; LSE: BHP) and is partly owned by Rio Tinto (NYSE: RIO; LSE: RIO), the world’s top two diversified miners. Shares in BHP, the world’s top copper producer, lost 12.3% in value in New York, while Rio Tinto was last trading down 10.3%.
Brazilian nickel and iron ore giant Vale (NYSE: VALE) is putting its Voisey Bay mine under temporary care and maintenance, reducing activity and output as a precaution to protect nearby indigenous communities.
— This news item first appeared on our sister publication, MINING.com.
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