Chilean government bolsters smaller copper producers with price protection

Vancouver – Measures the Chilean government is taking to support small and medium-sized copper producers will translate into a US55¢-per-lb. copper premium over London Metal Exchange (LME) prices for those producers, the Chilean mines minister Santiago Gonzalez says.

In a statement detailing a meeting between Gonzalez and Central Workers Union president Arturo Martinez, Gonzalez says ENAMI, the government’s national mining company, would take additional measures beyond those already promised by Chilean President Michelle Bachelet to help smaller copper producers survive the current period of low copper prices.

In late November Bachelet, speaking at the Chilean Mining Council’s annual dinner, said ENAMI would pay a premium for copper so long as the metal sells for less than US$1.99 per lb.

Now Gonzalez says ENAMI will add to that incentive and pass on savings it is incurring from the recent plunge in acid prices.

For smaller and medium producers, he says, the two measures represent a 55¢ bonus over the per lb. price of copper on the LME.

The Chilean government is giving small and medium producers the incentives in order to protect jobs in Chile’s all important copper mining sector.

“As a government we are determined in a big campaign to defend jobs,” he says in the statement.

And he warns trouble is likely on the way.

“In total, of the 30,000 jobs that we have in small and medium mining companies, we could have problems with about 4,000 jobs,” he says.

The government is hoping its intervention will dampen job losses. Unlike other less fortunate South American country’s with thin bankrolls, Chile is in the enviable position of having saved nearly $30 billion during the last half-decade, years that saw sky-rocketing copper prices.

At the Mining Council’s annual dinner in November Bachelet said she planned to use these savings to stimulate the economy as recession threatens.

“Because we have learned lessons from our history as a mining country,” Bachelet said, “we knew to take advantage of the window of opportunity that the high price of copper opened to us in recent years.”

As for Chile’s large copper producers, however, these should not expect the same kind of assistance the government is giving smaller and medium producers.

Gonzalez calls larger producers the “least vulnerable” and says that in his department’s analysis of larger producers, “up until now we haven’t seen difficulties.”