SANTIAGO – Chile’s deputy finance minister said on Wednesday that the drop in the price of copper, the country’s main export, is “here to stay.”
“There’s a serious situation, which is that margins have been sharply lowered due to the drop in copper prices and rising costs,” Alejandro Micco said at a meeting with members of Chile’s Metallurgic and Metal-Mechanic Industries Association at a convention center in Santiago.
Copper prices have averaged $2.67 a pound so far this year, an amount that translates into a profit margin of just $0.50 a pound assuming that price holds steady and costs remain at last year’s levels.
The lower price of the red metal has had a clear impact on investment in Chile and other mining countries, Micco said.
It is therefore necessary to redirect resources to sectors that are more productive and derive greater benefit from the weaker peso, such as agriculture.
A strike by contract workers at state-owned copper giant Codelco, meanwhile, has added to the sector’s woes in recent days.
Numerous violent incidents, including one in which a protesting contract worker was shot dead by police last Friday, have affected normal mining operations at Codelco, which has sought for years to reduce costs at its aging deposits.
Micco said the government will remain attentive to situations that affect the operations of Codelco, one of the country’s main sources of hard currency.
“We’re always monitoring this state company to ensure it fulfills its social role, meaning that it’s efficient and generates funds for the country,” the deputy finance minister said.