A powerful winter storm, classified as a potential Category 5 atmospheric river, is sweeping across Chile, which accounts for nearly a quarter of the world's mined copper. This storm, forecast to bring up to 150 millimeters of rain to the central copper heartland, poses a significant threat to mining operations, ports, and transport networks. The prolonged nature of the storm, rather than a single event, is expected to present the greatest challenge.
The potential disruptions include flooded open pits, damaged access roads, and interruptions to concentrate shipments. Past storms have forced Codelco to halt operations at major mines like El Teniente, resulting in an estimated loss of 5,000 metric tons of copper production and $7.5 million in daily lost revenue. Such operational halts and logistical bottlenecks at ports, where copper concentrate can turn into sludge, could tighten physical copper availability globally and affect premiums in Asia and Europe.
In response to the imminent storm, Chile's government convened emergency meetings with major mining companies, including Codelco, Antofagasta Plc, and Teck Resources Ltd., to review contingency plans and ensure emergency protocols are in place. The mining ministry and regulator Sernageomin have activated crisis committees to monitor landslide and mudslide risks. Power distributors like Enel and CGE are increasing their field personnel dramatically, with Enel boosting staff by nine times and CGE deploying up to 290 brigades with 800 people.
While copper prices initially saw limited damage due to the supply risks posed by the Chilean storm, an escalation in US-Iran hostilities later caused a broader selloff in metals, with copper for September delivery sliding 1.1% to $6.27 per pound in evening trade. The storm threat comes amidst an already stretched supply picture, with Antofagasta reporting a 9.5% drop in first-half output and BHP flagging declining Chilean output. Analysts estimate that 1.6 million tonnes of annual production capacity could be temporarily suspended. The Chilean government has raised its 2026 copper price assumption to $5.90 per pound from $5.46, reflecting heightened concern over supply.
