Chile pushes for diversification as US tariffs shake copper trade

Despite the current macroeconomic turmoil, uncertainty in the geopolitical landscape and shifts in global mineral supply chains, executives from Anglo American, state-owned Codelco and Antofagasta Minerals remain upbeat about the future of copper and in Chile's role as a strategic supplier to the United States and are determined to diversify.

For now, the 90-day tariff pause announced by US President Donald Trump as part of his purported strategy to boost domestic manufacturing has maintained uncertainty.

The order has even raised concerns for Chilean finance minister Mario Marcel, who said on Thursday that he was not clear about the implications of the measure for the previously announced 10% tariff on Chilean products, excluding copper.

Although some analysts, banks and traders predict that tariffs could still be applied to Chilean copper, especially given Trump's eagerness to promote domestic mining and consolidate a protectionist economic agenda, regardless of the final outcome, the current environment has already inflicted significant damage on the mining market.

Impacts

"It damages consumer and investor confidence, and that impacts gross consumption, which opens the door for prices to fall. Today, it doesn't seem so surprising that the copper price has fallen below US$8,000 per ton," a source told BNamericas on condition of anonymity.

The same source projected that copper prices will remain in the range of US$8,000/t to US$8,500/t this year. That will provide some relief to China, which will be resilient but still fragile in the face of the 125% tariff rate imposed by Trump.

According to media reports, Goldman Sachs noted that even if Beijing ramps up its efforts to mitigate trade disruptions, those policies are unlikely to fully offset the negative impact of the tariffs. The firm this week downgraded its growth forecast for the world's second-largest economy from 4.5% to 4.0% for 2025.

However, Chile's long track record as the world's top copper producer, its longstanding bilateral relationship with the US, rising demand and copper scarcity continue to mean there are opportunities.

Chilean copper

Anglo American CEO Patricio Hidalgo said during Cesco Week in Santiago that projected copper demand through 2040 is equivalent to the production of around 80 mines like Los Bronces. The operation produced 172,400t of fine copper last year.

Hidalgo expressed confidence in Chile's position, "It has been and will be a reliable partner of the US," the executive said at the ICA Day at Cesco Week event, hosted by the International Copper Association.

Codelco's chairman Máximo Pacheco said at the same event that the company has been taking measures to address the risk outlook, including "strengthening our diversification, since Codelco already has a very diverse market portfolio, and creating flexible commercial strategies, especially as we see how other markets are also beginning to experience much stronger demand," he said. 

While Pacheco emphasized that being agile and flexible will allow trade mechanisms to move quickly in times of adjustment like the present one, mining minister Aurora Williams stated at the ICA event that it is also important to advance with the diversification of the export matrix.

"Today, the ministry begins working to develop a critical minerals strategy," she said regarding Chile's upcoming mission.