Anglo American expects Chile copper output to keep falling

Anglo American expects Chilean copper output to keep declining until 2026, as ore grades at the Los Bronces and El Soldado deposits fall, water remains scarce and key components of the Los Bronces Integrated (LBI) megaproject are postponed.

The company’s Chilean operations produced 505,000t last year, including attributable output from its 44% stake in Collahuasi. Guidance was 520,000t, however. 

Its share in Los Bronces and El Soldado is 50.1% while state miner Codelco and Mitsui have 29.5% in a JV and Mitsubishi Corp 20.4% but Anglo's production figures from the two mines are on a 100% basis.  

This year, the company expects to produce 430,000-460,000t, a maximum of 410,000t in 2025 and 470,000t in 2026, according to the company's 4Q23 report released on Thursday.

Anglo announced cost reduction plans to face the contraction cycle, in particular reducing the unit cost of Los Bronces, 65km from Santiago, by 15%.

One measure that will contribute to the cut and affect lower productive capacity will be the retirement of an old plant, which will save close to US$70mn a year due to lower water consumption, metals division head Ruben Fernandes told investors in December.

Anglo also signed an agreement with Aguas Pacífico to supply desalinated water from 2025 to cover more than 45% of Los Bronces' needs. It has also plans to explore other alternatives and stop using fresh water at the unit from 2030.

Permitting for the US$3.3bn LBI initiative is causing problems. Environmental review agency SEA and surrounding communities have voiced opposition since the process began in 2019.

LBI is key to gain access to better ore in the open pit and at the underground level. Although it was approved by the ministerial council, opponents filed a new request for rejection in December.

Anglo American CEO Duncan Wanblad told investors that Los Bronces underground is not likely to start before 2030.

In 4Q23, Anglo’s Chilean production decreased 16% year-on-year. Los Bronces output fell 32% to 57,200t and El Soldado’s 52% to 7,300t.

In contrast, the company achieved an increase in attributable copper production at Collahuasi in Tarapacá region, whose production grew 14% in 4Q23, reaching 71,700t, mainly due to commissioning of a fifth ball mill in October, the report said.

Persistent drought in the north is a limiting factor, however, at least until the desalination plant starts operation in 2026.

Operation	Production 2023 (in t)	Production 2022 (in t)	2023 vs 2022
Los Bronces (100% basis)	215,500	270,900	-20%
El Soldado (100% basis)	39,500	40,200	-2%
Collahuasi (100% basis)	573,200	570,700	0%
Collahuasi (44% equity share)	252,200	251,100	0%

Copper sales also dropped by 10% last year, to 504,800t, partially due to port closures because of high tides.