Global race for copper production: Will Codelco be able to distance itself from BHP?

Codelco's announcement of buying the 10% stake that Enami holds in Quebrada Blanca might not be enough for the state-owned company to maintain its leadership as the world's leading copper producer.

Yesterday, the purchase of Enami’s 10% stake in Quebrada Blanca by Codelco was announced. The deal is part of its financial stabilization plan and involves the immediate acquisition of shares in exchange for a disbursement of $520 million USD in two payments.

This purchase would also bring production benefits to Codelco, which has faced significant declines. During the first six months of 2024, the state-owned company achieved its own production of 579,785 tons, 8.4% less than in the first half of the previous year; meanwhile, total production (including Codelco’s stake in Anglo American Sur and El Abra) reached 628,000 tons, 8.2% less than in 2023.

Meanwhile, Quebrada Blanca, a mega copper deposit, has a resource base of 10 billion tons, with a grade of 0.38% Cu and future growth opportunities. In full operation of its second phase, it will rank among the 20 largest copper production operations in the world, and nationally, it will be the sixth largest producer after Escondida, Collahuasi, El Teniente, Radomiro Tomic, and Los Pelambres, considering their 2023 productions.

However, the deal with Enami may not be enough to separate from BHP, the Australian company that has been "nipping at Codelco's heels" to dethrone it as the world's largest copper producer.

Last week, the Australian company announced a phased strategy to increase production in South Africa to 500,000 tons of refined copper cathodes by the early 2030s, and potentially up to 650,000 tons by the mid-2030s, compared to the ~322,000 tons in the last financial year. BHP's copper province in South Australia includes the Olympic Dam, Prominent Hill, and Carrapateena underground mines, which supply volumes of copper concentrate to a centralized smelting and refining complex at Olympic Dam that produces refined copper cathodes. The company is also advancing the Oak Dam exploration prospect.

“We are already increasing BHP's copper production in South Australia with projects and studies underway at all our operating sites, and we are making good progress to potentially double our current production by the middle of the next decade,” said Anna Wiley, president of BHP Asset Copper South Australia.

“Codelco needs to get its structural projects underway to reclaim its privileged position in the industry”

Juan Ignacio Guzmán, CEO of GEM Mining Consulting, told Mining Reporters that Codelco has been reducing its production since 2015: "From around 1.7 million tons of fine copper to around 1.3 million tons."

“It’s important to understand that the 10% of Quebrada Blanca could add 25,000 to 30,000 tons of fine copper per year, which in concrete terms is about 2% of Codelco's production. So, it is an interesting change in terms of total production, but the truth is that the relative impact it has on Codelco's production is relatively minor,” said Guzmán.

He also stated, “In the competition to be the world's leading copper mining company, this 10% of Quebrada Blanca doesn’t make a big difference, and I believe that for Codelco to regain its privileged position in the industry, it needs to get its structural projects that it has been developing for nearly a decade up and running. It needs to return to or aspire to produce at least 1.5 million tons of fine copper per year to maintain its position as the leading producer.”