With expanded capacity and reduced costs, Chile is well positioned for turnaround in copper prices

Copper price rebounds A worldwide scramble for diminishing supplies of copper has pushed the red metal's price to more than $2.20/kg ($1 per lb), the highest level since 1980. The first nine months of 1987, world copper production was down 1% from a year ago, while consumption rose 7%. Demand has been fueled by economic strength in several countries, particularly Japan, South Korea, and Taiwan. The price has also been helped by interest rate declines that have prompted manufacturers to build up inventories. In addition, China is expected to be a major buyer in 1988 as it stocks up for its five-year industrialization plan. There appears to be no sign of any significant increase in copper supplies until later 1988 or early 1989. This means supplies probably will remain tight for some time even if world economic activity slows. Strikes and other production problems slowed world output of copper in 1987. As a result, copper supplies are the lowest they have been in 14 years. World inventories currently total 625 kt (690,000 st). That is not much above the 585 kt (645,000 st) level reached in 1974 when the price of copper rose to a record $3.84/kg ($1.74 per lb). This makes all the more interesting what Chile, the world's largest copper producer, has been doing lately. Chile has been the world's largest copper producer since 1982, when it overtook the United States. Table 1 shows Chile's copper grades, reserves, and production at its mines. Chile contains roughly one-fifth of the world's copper reserves. At present production rates, these reserves would last for more than 100 years. In 1986, Chile produced 1.4 Mt (1.5 million st) of fine copper, up 3%. Chile accounted for 17% of the world's copper output.