The price of copper has doubled since last March and reached its highest value in ten years on Wednesday, largely thanks to purchases from China, a situation that opens up
"opportunities"
for the economy of Chile, the main producer. red ore, rejoices the government.
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The price of copper reached 4.21 dollars a pound on the London Metal Exchange on Wednesday, a record since August 2011 prides itself on the Chilean press.
Some analysts now believe that copper could break all-time highs in the coming weeks and trade above five dollars a pound.
China's sustained appetite, which alone accounts for nearly half of global demand, but also the development of renewable energies and electric mobility, which require copper, are boosting this market.
Added to this context is the increase in liquidity due to economic recovery plans to cope with the crisis following the pandemic, as well as the weakening of the dollar which lowers the price of raw materials paid for in dollars.
On the supply side, the last few years have been characterized by a mining industry with low levels of investment, after the end of the
“super cycle”
between 2003 and 2013, limiting expansion projects.
An ideal scenario for Chile which provides about a third of the world supply.
Opportunities and "more jobs"
Each cent of the dollar thus gained in the market pockets the Chilean Treasury an additional 22 million dollars.
In Chile, the copper industry accounts for 10 to 15% of the GDP.
This price increase offers Chile
"opportunities to continue to develop the mining sector, increase its production capacity to meet this expected increase in demand,"
said the Minister of Mines and Energy, Juan Carlos. Jobet.
For the Minister of Finance, Rodrigo Cerda,
“this means more jobs”
after the 6% drop in GDP in 2020 following the coronavirus pandemic.
If the country slowed down its economic activity during periods of containment, copper production has remained unchanged.
With these assets in hand,
"Chile should now initiate a reduction in supply so that prices are adjusted to real prices"
, recommends Marcela Vera, an academic from the University's School of Business and Economics. from Santiago.
“Copper is a non-renewable material and it won't last forever,”
she warns.
