The copper market "is currently exhibiting unexpected strength, but it is unclear if this can be maintained although it does appear a new base price level has been established at $2.50-2.60/lb, [$5,512-5,732/mt]" Antofagasta plc said Tuesday.
Three-months copper prices on the London Metal Exchange hit an intraday high of $6,642.50/mt in early trade Tuesday, the highest level since November 2014.
"The outlook in the mid to longer term continues to be favorable as demand is expected to grow at around 2% while supply growth remains constrained," the UK-listed Chilean miner said in its half-year results statement.
In the shorter term, "the market is moving to a tighter demand-supply position with a small deficit expected this year and next," Antofagasta said.
It added, however, that "volatility is anticipated as demand expectations are continually reassessed although supply has stabilized following the spate of disruptions earlier in the year."
Antofagasta's group copper production in the first half of 2017 was 346,300 mt, 7.1% higher than in the same period last year due to higher production at its Centinela and Antucoya units. In the first half of 2016 Antucoya was ramping up to full production, having achieved commercial production in April 2016.
Group gold production was 112,200 oz in the first six months of the year, 2,700 oz higher than in the first half of 2016 as a result of higher grades at Centinela, while molybdenum production at the Los Pelambres mine was 4,500 mt in the first half of 2017, compared with 3,300 mt in H1 last year, principally due to significantly higher grades.
Group copper production for the full year 2017 is expected to be between 685,000 mt and 720,000 mt.
First production from the Encuentro Oxides deposit in the Centinela mining district is expected in Q4, 2017, Antofagasta said.
The deposit is expected to produce an average of around 43,000 mt/year of copper cathode over an eight-year period, utilizing the existing capacity at Centinela's solvent extraction-electrowinning plant, helping to offset a natural decline in production due to falling mined grades at Centinela's existing oxide pits.
Meanwhile, as of the end of June construction on the new molybdenum plant at Centinela was complete, with pre-commissioning tests underway and first production expected in January 2018, Antofagasta said.
The project will allow Centinela to produce an average of 2,400 mt/year of molybdenum.
