On November 30th, I attended to the monthly breakfast hosted by Chilean-American Chamber of Commerce (AmCham) in Santiago Chile, where the guest speaker was Diego Hernandez, Chief Executive Officer of Codelco. In his Copper Business Outlook presentation, he made a complete analysis of current and future conditions for the copper business.
He highlighted how China is currently the biggest consumer of copper in the world. They consume 38% of Codelco’s production. Also, in my opinion he sounded really confident in how good the future of copper looks, regardless of the possible slowdown in the worldwide economy that can potentially impact the price and demand of copper. Mr. Hernandez mentioned that the reason for this is because copper is directly linked to the energy efficiency. Everyone is looking for more efficient cars, more efficient motors, and less use of electricity—all which requires more copper.
He cited as an example of how a hybrid car will use 8 to 10 times more copper than a regular car. He also mentioned how Codelco is investing in finding new applications for copper, such as the use of copper in cages for fish-farming. Cages made from copper, rather than traditional nylon, are more durable and fully recyclable while copper’s antimicrobial properties prevents the build-up of fowling on the mesh. The fish enjoy cleaner, better oxygenated water and suffer less from parasites and other diseases. A copper cage costs considerably more than its nylon equivalent, but the fish grow faster and larger, which increases the harvest. These antimicrobial properties of copper are now been investigated in application in the healthcare industry.
In terms of challenges for Codelco, Diego Hernandez cited as the main ones as higher production costs and lower grade ores causing a production decline and forcing them to go deeper in the mines in order to reach rich deposits. Also, when asked about the problem of not having enough qualified workers, he answered that this situation is currently is not a big issue, but they are partnering with local universities in order to have a good pool of qualified people in order to achieve their planned growth.
I think this conference was excellent since we don’t often have a chance to hear the thoughts of a CEO of the largest copper producer in the world. He highlighted the fact that everyone who wants to participate in this industry needs to have a long-term vision, since prices and economic pressures come and go, but the demand for copper will likely remain high. Also, I think it is important to see how miners are changing and how they are becoming developers of new technologies by investing in research and development of new application of copper, helping not only change their image but also secure their future.