By Zandi Shabalala
LONDON (Reuters) – The reactivation of a smelter belonging to Chile’s state-run Codelco, the world’s top copper producer, will be further delayed until the end of October this year after missing a previous target of April, four sources told Reuters.
Codelco [COBRE.UL] is also buying copper cathode on the spot market, the sources added.
One of the sources said the purchases were part of efforts to build up its in-house trading unit while two other sources said the copper producer was short of metal.
Codelco was not immediately available to comment.
The Chuquicamata smelter is one of the world’s largest, producing 320,000 tonnes of metal in 2018, and was originally halted in December last year for changes to meet new emissions standards.
More broadly Chuquicamata, or “Chuqui,” one of Codelco’s key copper deposits, is undergoing a complex $5 billion-plus (£4.1 billion-plus) transformation into an underground shaft mine from an open pit facility to counter deteriorating ore grades.
The 24-million-tonne copper market is expected to see a deficit of 189,000 tonnes this year which will widen to 250,000 tonnes in 2020, according to the International Copper Study Group.
Prices of the metal used widely in the power and construction industries are trading around $5,880 a tonne on the London Metal Exchange <CMCU3>.
Smelters are charging miners less to refine concentrates into metal due to falling availability of mine supply, reflected in declining treatment and refining charges.
Treatment charges in China, the world’s top consumer of copper, are around $60 a tonne, their lowest since Nov. 2012.
The smelter delay will also affect the output of molybdenum, a byproduct of copper smelting and used to make stainless steel, where Codelco is the world’s second largest producer in the 265,000-tonne market.
As part of efforts to modernise state-owned Codelco, about 200 employees lost their jobs at the company in July, according to a source.
Codelco appointed company veteran Octavio Araneda as the new chief executive last month as it pushed forward with a 10 year, $40 billion plan to overhaul its flagship mines against a backdrop of falling ore grades and wavering markets.
Reuters reported in May that the Chuquicamata mine will see a 40% drop in production over the next two years.
(Reporting by Zandi Shabalala, additional reporting by Fabian Cambero in Santiago ; Editing by Veronica Brown and Alexandra Hudson)