Codelco stays flexible amid tariffs, but the company is not making any decisions based on short-term situations, the chairman of the Chilean copper producer said on Monday April 7.
In an interview during the annual CESCO week in Santiago, Chile, Maximo Pacheco told Fastmarkets that the long-term nature of the copper industry and Codelco’s role as the world’s largest producer meant that staying disciplined was key.
“We’ve learnt, in the 54-year history of Codelco, not to base our decisions on what happens on one day or in one week. We are in a long-term, cyclical market, and the fundamentals for us are our competitive position,” he said on Monday.
“As a company, we’re completely convinced that the long-term future of the copper business is based on the decarbonization of the economy and on the energy transition. We follow what’s going on in the world very closely, but we are very disciplined in being focused on doing the right things for the company,” he added.
Pacheco was referring to the imposition of tariffs by the US, which took effect on Friday April 4. Chile is subject to a 10% universal tariff, although copper — one of the country’s most important exports — is currently exempt.
However, copper is the focus of a Section 232 investigation that could result in tariffs down the line, the White House has said.
Copper prices update
Prices of copper on the London Metal Exchange have fallen by more than 10% in the past week, the largest ever weekly decline, while CME copper prices have fallen from recent all-time highs, dropping by 18% in the two days after the tariffs were introduced last week.
“We are prepared to live in any scenario that we will be living. We understand that today’s world is very uncertain. It’s a world that’s changing, and we are well-prepared for that,” Pacheco said.
This all makes flexibility central to navigating the current landscape, Pacheco said.
“We’ve learned that the right thing to do in terms of our commercial policies is to have the flexibility to adapt to these kinds of situations. When you see that there will be changes in trade flows, we have the flexibility to manage that,” he noted. “If there is a market that’s growing faster and there’s another market that’s somehow being restructured, well, we move our copper to the markets that are demanding more copper,” he added.
Codelco, which is a state-owned company, is not involved in or aware of any potential discussions that might be happening on tariffs between the Chilean government and the US, Pacheco noted. “It is not our responsibility [to negotiate tariffs] – it is the responsibility of governments,” he said.
India seeing strong copper demand
Pacheco singled out China, the US, India and Southeast Asia as areas where the company has continued to see strong copper demand.
“I just spent a week in India, which consumes 900,000 tonnes of refined copper. The world, on average, consumes 3.5 kilos of copper per capita annually. India consumes 0.75 kilos, so the growth potential is very large,” he told Fastmarkets.
Part of Pacheco’s trip included a visit to Adani Group’s facilities of its subsidiary Kutch Copper Limited, which is developing a copper smelter in the town of Mundra, he said. The smelter being built by the Adani Group also includes a copper refinery and wire rod, pipe, precious metals and acid plants, among other facilities.
Codelco recently agreed to supply concentrates to Adani’s new smelter starting this year, a move which will support the diversification of its customer portfolio.
“I visited the smelter, which will start sometime soon, hopefully, or probably this year,” Pacheco added.
Smelter in Chile
Codelco is considering building a new copper smelter, with discussions ongoing with parties interested in securing concentrate supply for their operations, Pacheco said. It would in part be a replacement of the Ventanas smelter, which was closed in 2023.
Now owned by Glencore, the last smelter constructed in Chile was Xstrata Copper’s Altonorte plant in 1993.
“The conversations continue, and we are still in negotiations to see what is it that investors need in order to develop a project and exactly how we can support the idea,” Pacheco said.
He noted that more than half of the copper Codelco produces is being sold as concentrate, making the desire to increase Chile’s smelting capacity even more important.
“We want to create value, to build a stronger position in the market. The parties with whom we are discussing this project are clearly sustaining their interest. They believe the world needs metallic copper and therefore it’s a discussion that we continue to have with them,” he added.
A year earlier, Fastmarkets reported that Chinese metals giant Minmetals and South Korean copper producer LS MnM had each shown interest in constructing and operating a new smelter in Chile.
Concentrates market tightness leaves smelters scrambling
Pacheco said the trend toward building smelters alongside mines was accelerating, particularly amid a tightness in the concentrate markets that has left many smelters scrambling to source units.
Typically, tighter spot supply leads to a drop in spot treatment and refining charges (TCs/RCs), which are the fees mining companies pay smelters to have their semi-processed ore – or concentrate – turned into finished metal.
TCs/RCs have fallen to record lows in negative territory amid a tightness in concentrate supplies. But smelting capacity has so far proven relatively resilient, with few closures or capacity cuts, he noted.
“Somehow, smelters have been able to sustain the low TC/RCs situation, which is obviously very new. It’s something that we haven’t seen before,” he said.
Antofagasta and Chinese smelters agreed to annual contract terms at $21.25 per tonne in December. Japanese smelters pushed back on this and achieved higher levels. This was well below 2024’s benchmark of $80 per tonne/8.0 cents per lb, and significantly lower than spot TCs/RCs.
Fastmarkets copper concentrates
Fastmarkets calculated its weekly copper concentrates TC index, cif Asia-Pacific – which represents the mid-point between smelter and trader purchasing numbers – at $(40.20) per tonne on Friday April 4, down from $(37.70) per tonne on March 28, a new record low.
It has also led some to question the relevance of a benchmark for copper concentrates.
“Obviously, the market is adapting to a new situation, and there are dynamics that we haven’t seen before. People still need a reference for contracts, and I think this largely enough volume on long-term contracts,” he said. “The majority of people will still have long-term agreements on a lot of numbers. Whether it’s a benchmark or not, that’s a different story,” he added.
Codelco’s copper production rose by 3,000-4,000 tonnes in 2024 to 1.329 million tonnes, and the company has set itself a goal of producing 1.7 million tonnes annually by 2030. Guidance for 2025 is 1.37-1.4 million tonnes.
“We have still some years to go, and we will be increasing our production year by year until we [reach] 2030. We continue to be very committed to that to that level,” he told Fastmarkets.
In Hotter Commodities, special correspondent Andrea Hotter covers some of the biggest stories impacting the natural resources sector. Read more coverage on our dedicated Hotter Commodities page here.
