Sonami projects sector growth of 6% to 7% by 2023

Sonami press release

This is an automated translation of the original press release issued in Spanish

When participating in the traditional economic projections seminar, organized by the Santiago Chamber of Commerce, the Sonami Studies Manager, Álvaro Merino, projected that next year the mining sector will grow between 6%-7% with a copper production close to 5,700,000 tons.

"The growth of the mining industry is explained by the low base of comparison and the relevant increase in copper production, fundamentally, from Quebrada Blanca , Pelambres and Escondida ," he specified.

In his presentation, the executive estimated that the price of copper would be in a range between 3.3 and 3.5 US$/lb and mining exports in the amount of 55 billion dollars.

Likewise, he estimated for next year “a surplus copper market due precisely to the significant entry of mining projects that were delayed, due, among other things, to the pandemic. The largest supply will come precisely from Latin America”.

However, Merino pointed out that in the copper market we must also consider the behavior of China, which captures 55% of world consumption. “China is showing a marked slowdown, where the Covid zero policy together with the real estate crisis have affected its growth, which is why the authorities have recently relaxed some controls and have provided measures to support the real estate sector.

Although this news is positive, he considered that caution must be exercised regarding the impact on growth in the medium and long term," he said.

In addition, he referred to other risk elements that affect the copper market, such as high inflation, the probable recession, the geopolitical risks generated by the war between Russia and Ukraine, and the tensions between the two giants of the world economy, as they are precisely United States and China, where what is at stake is the future world hegemony.

On the other hand, the Sonami Studies manager estimated that this year mining activity will fall by close to 4.5%, with lower production of copper, molybdenum, gold and silver, which will be partially offset by the increase in production. of non-metals, particularly in the case of lithium.

However, the most relevant factor in the decline in mining activity is precisely the lower production of copper, which will go from 5,625,000 tons in 2021 to an amount close to 5,300,000 tons in 2022, which is mainly explained by due to lower ore grades, technical problems in some deposits, and reduced water supply, particularly at sites located between the Coquimbo and Metropolitan regions

He added that the price of copper, the country's main mining and export product, which reached the highest historical record in nominal terms last March, has gradually been declining in value, "which has been marked by the risks macroeconomic changes in the world economy together with the slowdown in China, which is naturally impacting the demand for the metal, despite the fact that the market fundamentals show limited production with low inventory levels”.

The manager of Studies of the National Mining Society projected that in 2022 the Chilean economy would close with a growth close to 2.5% while by 2023 it would contract 1.5%.