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Copper price hits record high as Chile gives bulls another reason to cheer
MINING.COM Staff Writer | May 7, 2021 | 9:32 am Markets China Latin America Copper
Copper price hit record high as Chile gives bulls another reason to cheer
SX-EW processing at Chuquicamata mine in Chile. Image from Codelco.
The world’s top copper producer Chile is giving bulls another reason to cheer while prices soared to an all-time high on Friday as optimism about a global rebound from the pandemic spurs a surge across commodities markets.
Copper for delivery in July ended the day up 3.2%, with futures trading at $4.7490 per pound ($10,470 a tonne) on the Comex market in New York.
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Chile’s lower house on Thursday approved a measure that would introduce progressive taxes on copper sales, potentially creating a total burden of more than 80% — or almost double that of other major copper-producing nations.
The measure, which would go into effect in 2024, still needs to be approved by the senate and could be blocked by the government in court. But if it succeeds, it could stall investments in a country where mature low-grade deposits need plenty of expenditure just to maintain output levels of about 5.7 million tonnes a year.
Related read: As China row deepens, 1 million tonnes of Australian copper concentrate needs new buyers
“This would at the very least delay any new capacity, extending the lengthy time-line to bring on a new mine,” said Grant Sporre, an analyst at Bloomberg Intelligence.
“Chile’s output could start to fade to 5 million tonnes.”
Chile’s copper export revenue jumped 69% in April. The world’s top copper producer said it had exported $4.541 billion worth of copper in April alone.
“THE COPPER MARKET AS IT CURRENTLY STANDS IS NOT PREPARED FOR THIS DEMAND ENVIRONMENT”
Goldman Sachs Group
Prices are up more than 30% this year and have more than doubled from lows in March of last year.
Click here for an interactive chart of copper prices
“Given high payments to the state, some assets would be un-investable and thus it limits the pool of mines that can make adequate returns, limiting supply,” said BTG Pactual analyst Cesar Perez-Novoa.
“No mining company is going to take risks without being rewarded.”
“It’s hard to foresee copper prices turning around amid the current bullish atmosphere,” Ji Xianfei, an analyst with Guotai Junan Futures told Bloomberg.
“Macro easing, ample liquidity and a weaker dollar continue to drive the rally, while the broader commodities surge is being fueled by bets on inflation.”
Trading house Trafigura Group, Goldman Sachs, and Bank of America expect copper to extend gains.
Steel prices across Asia and North America are also booming, iron ore is at a record above $200 per tonne as miners struggle to keep up with the frenzied pace of consumption, and tin topped $30 000 for the first time in a decade.
“The copper market as it currently stands is not