SANTIAGO -Rising geopolitical tensions linked to the ongoing Middle East war have sent ripples through global commodity markets, driving up operational costs for Chile’s state-owned mining giant, Codelco, even as the firm stays firmly on course to meet its production ambitions for 2026.
The world’s largest copper producer confirmed that heightened price pressures triggered by the conflict have increased its cash costs significantly, though executives insist that output targets remain intact.
Speaking to Reuters, Codelco Chairman Máximo Pacheco acknowledged that the war in the Middle East has translated into higher production expenses, adding at least 10 cents per pound to cash costs. He described the increase as substantial, underscoring the strain geopolitical instability continues to place on the mining industry.
“The biggest challenge for the industry is operational continuity, and we’ve seen it becoming more difficult to produce copper every day,” Pacheco stated, highlighting the growing complexity of maintaining steady output in an increasingly volatile global environment.
Despite these headwinds, Codelco remains committed to its production roadmap. The company is targeting 1.344 million metric tons of copper output in 2026, a recovery trajectory after slumping to its lowest production levels in 25 years during 2022 and 2023.
Looking further ahead, the mining behemoth is aiming to ramp up annual output to 1.7 million tons by 2030, signaling long-term confidence in its operational recovery strategy.
In a bid to cushion itself from supply chain shocks, Codelco strategically secured sufficient sulfuric acid—an essential input in copper production—before global prices surged. This forward-looking procurement approach has helped the firm stabilize operations amid market turbulence.
“We can weather the current situation with sulfuric acid with relative ease,” Pacheco noted, emphasizing that proactive planning has shielded the company from deeper disruptions.
On the production front, Codelco reported output of 271,300 tons of copper in the first quarter. While this marks a decline compared to the same period last year—largely due to scheduled maintenance activities—the figures remain within projected expectations.
However, uncertainty continues to loom over El Teniente, one of Codelco’s flagship mines, following a tragic accident last year that claimed the lives of six workers. Pacheco refrained from giving a timeline for when the mine would return to full capacity, stressing that a thorough technical reassessment is underway.
“It requires extensive study, geosciences, modeling, and redesign of our mining plan, and therefore we will take all the time necessary,” he said, noting that earlier estimates suggested up to eight years could be required for full recovery.
Despite rising costs and operational challenges, global copper demand remains robust. Pacheco, whose term concludes at the end of May, said the Middle East conflict has not significantly dampened international appetite for the metal, with market fundamentals still strong and shipment levels largely unaffected.
Looking ahead, he also signaled Codelco’s openness to regional cooperation opportunities, particularly involving copper transport from emerging mining projects in Argentina’s Andes region near the Chilean border.
“I imagine there will come a time when they will bring it up for discussion,” he remarked, suggesting potential cross-border synergies if economically viable.
