Anglo expects demand to offset copper volatility

A looming trade war between the US and China will fuel nearterm volatility for copper prices, but demand and tight supply will bolster long-term market fundamentals, according to Hennie Faul, Anglo American’s CEO for copper.

The price of the metal has fluctuated along with other commodities in recent weeks as tit-for-tat tariff threats between the world’s largest economies have rattled markets. “We could have a bit of volatility on prices. But it’s not massive,” said Faul.

“It’s not going to impact supply or demand.”

Declining ore grades at existing mines and a lack of recent investment have crimped supply even as demand is expected to grow, Faul said.

But some analysts note the copper imbalance is ebbing and that the spike in demand from the electric vehicle revolution may be less than anticipated, at least in the next few years.

“It’s not exponential,” Faul said. “It just underpins even more the fundamentals of copper as a world commodity.”

The favourable outlook, he said, lent itself to productivity improvements and potential expansion at Anglo American’s main copper interests in Chile: Los Bronces and Collahuasi. Both are among the world’s top copper deposits.

At the company’s Collahuasi mine, a joint venture with Glencore in parched northern Chile, Faul said the company would soon “sit with the other shareholders and look at ways to expand” but it would first need to tackle long-standing issues with water supply.

“The first aim is to look at where we can use technology to minimise the use of water, and Collahuasi is doing those studies,” Faul said.

At Los Bronces, Anglo’s flagship deposit on the outskirts of Santiago, Faul said the company had successfully dealt with water and labour issues that have plagued the mine.

“We’re looking, in terms of the life of the mine, to really mitigate and take Los Bronces further down the cost curve, through productivity,” he said.

The mine abuts state-run miner Codelco’s Andina deposit, and Faul said that the two companies were always seeking synergies.

“There’s no intention by us to take over ... it’s more about being good neighbours,” he said.

In Peru, Faul said that there should be a business decision on the Quellaveco project in the second half of 2018.

“We’ve taken it to the final stages of completion,” he said.