 |
| Chile copper production |
Chile is positioning itself for a copper production boom in 2026, with 13 significant projects worth $14.8 billion slated to hit crucial milestones. As global copper prices surge amid concerns of supply shortages, Chile stands to gain from these ventures, with seven domestic projects projected to start operations next year. These projects are expected to increase the country’s copper output by nearly 500,000 tonnes annually, supported by investments totaling $7.1 billion.
Key Projects Driving Chile’s Copper Expansion
Among the most notable initiatives are Anglo American and Glencore’s Collahuasi upgrades (C20+), Codelco’s Rajo Inca expansion, and Capstone Copper’s Mantos Blancos. These projects, along with Andes Iron’s controversial Dominga and BHP’s Spence and Capstone’s Santo Domingo, are central to Chile’s plan to expand its copper mining capacity. As per Chile's Copper Commission (Cochilco), these efforts could boost the country's output by 100,000 tonnes, reaching 5.6 million tonnes of copper annually by 2026.
However, not all of these projects will ramp up production immediately. Experts, including GEM CEO Juan Ignacio Guzmán, caution that full-scale production may take time. As a result, while Chile is expected to contribute significantly to global copper supply, the timing and execution of these projects will be critical in meeting anticipated global deficits.
The Risks and Political Landscape
The primary risk for these projects is not market dynamics but community relations and local opposition. While many projects have cleared initial regulatory hurdles, those set to break ground will face ongoing scrutiny and approval processes. Legal challenges may emerge, potentially delaying construction timelines.
The political landscape also plays a role in Chile's copper future. The recent election of José Antonio Kast, a conservative candidate, has led to market optimism. His government is expected to streamline permitting processes and provide more regulatory certainty. This could potentially accelerate decision-making, making it easier to secure investment and navigate operational hurdles, ultimately supporting faster project execution.
A Bullish Copper Market on the Horizon
Copper prices have surged nearly 40% this year, with the metal hitting new record highs above $12,000 per tonne. Concerns over supply shortages, particularly due to stockpiling in the U.S., are further fueling the price rally. This market tightening, combined with a 10% output cut from Chinese smelters, has strengthened sentiment in the copper sector.
JP Morgan forecasts a 330,000-tonne deficit in 2026, exacerbating fears of supply shortages. With no major expansions on the horizon, the gap between demand and supply is expected to widen. However, some experts, like Benchmark Minerals’ Albert Mackenzie, argue that the market will adjust. Increased demand could be tempered by higher prices, a greater supply of scrap, and technological innovations.
Chile's robust pipeline of copper projects, coupled with the expected growth in global demand, puts the country at the forefront of addressing the copper shortage. Nevertheless, for these projects to fully materialize and support the bullish copper outlook in 2026, substantial investment and swift regulatory approval will be essential.
ScrapInsight Commentary
Chile’s copper expansion efforts are critical in meeting the expected 2026 supply deficit. While political stability under Kast’s administration may streamline project execution, the risk of community opposition remains a significant hurdle. The outlook for copper prices remains bullish, but timely execution will be key to Chile’s success in capturing market share.
