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Peru copper outlook mixed

A major investment bank has questioned this week’s bullish copper outlook projections by Peru energy and mines minister Francisco Ismodes, saying the form guide for the world’s second biggest producer suggests it will struggle to meet its target.
Peru copper outlook mixed Peru copper outlook mixed Peru copper outlook mixed Peru copper outlook mixed Peru copper outlook mixed

Anglo American’s Quellaveco copper mine in Peru’s Moquegua region. Image: Fluor

Staff reporter

BMO Capital Markets said a presentation in Arequipa by the minister in which he claimed the country's copper output could grow 27% on last year's levels by 2022 implied about 3 million tonnes per annum of new copper production.

"Although new mines such as Quellaveco will boost output, we are significantly more cautious on project delivery and see about 2.5Mt as a more realistic 2022 level," the bank's analysts said.

"[This year] is struggling to see any growth.

"On the basis of the current project pipeline, we model Peru's output as peaking in 2024."

BMO said in a recent note Peru's copper output in the first half of 2019 was up about 2.7% year-on-year, but "still below the same period in 2017".

"The consistent 500,000tpa-plus growth rates seen over the 2015-16 period are very much in the past," it said.

BMO also said neighbour Chile, the world's biggest copper producer, was encountering similar "growth struggles".

"As the largest and second-largest copper producing countries in the world, trends in supply from Chile and Peru can have a major influence in market dynamics," it said.

"Chile has had a perennial problem with copper growth, despite sustained investment in new operations. [While] 2018 was a record year … helped by a strong recovery at the world's largest copper mine, Escondida,  disruptions have returned [in 2019] in the forms of Atacama rains and a Codelco labour disruption."