Antofagasta has significantly reduced its annual copper production guidance following severe winter weather that forced the shutdown of its flagship Los Pelambres operation in Chile. The company lowered its 2026 copper output forecast to between 625,000 and 655,000 metric tons, down from an initial target of 650,000 to 700,000 metric tons, according to an August 13 announcement. The downgrade follows an orderly shutdown at the high-altitude Los Pelambres mine announced on July 24 due to extreme rain and snow conditions that prompted the Chilean government to declare a state of catastrophe in the semi-arid Coquimbo region.
The operational setback comes at a time of record copper prices globally. On August 7, COMEX copper futures reached an all-time record of US$6.77 per pound, surpassing the previous peak set in May. On the London Metal Exchange, three-month copper contracts reached US$14,258 per metric ton that day, approaching the LME all-time record of US$14,527.50 per ton set on January 29.
Despite the production cut, Antofagasta reported a 27 percent year-on-year increase in first-half earnings before interest, taxes, depreciation and amortization, driven by the higher realized copper prices. The supply pressures intensified when the Democratic Republic of Congo imposed an immediate export ban on copper and cobalt concentrates on August 6, aiming to force domestic processing. This directive further rattled an already supply-constrained market.
LME warehouse stocks have plunged significantly, falling from 401,000 metric tons in early May to 214,550 metric tons, with 58 percent held as canceled warrants awaiting physical load out. Smelter processing fees have already turned negative amid fierce competition for concentrate. Market analysts attribute the copper price surge to concentrated demand spikes from artificial intelligence data centers, electrification and power grid modernization.
China increased its grid investment by 13 percent year-on-year in the first half of 2026 as part of a US$574 billion infrastructure plan. Global supply faces additional tightening from 50 percent US Section 232 tariffs on semi-finished copper imports and Chinese scrap restrictions. William Osnato, director of commodity data research and analysis at Barchart, told CNBC that the fundamentals driving elevated copper prices stem from data center and power grid demand supporting rapid artificial intelligence industry expansion.
Osnato further noted that as global supply chains scramble for physical metal, 'It is definitely a new situation for Dr. Copper.' The company is now evaluating investments to shorten recovery times after extreme weather, with El Niño expected to raise the risk of heavy rainfall across Chile and Argentina.
Source: investingnews.com