Financial Diary – Santiago
The metals rally is generating a double virtuous effect on Chilean mining. Just when copper surpasses the psychological barrier of US$5 per pound – today it closed in cash at US$5.02 on the London Metal Exchange – the costs to produce the red metal in Chile are falling by over 8%, about 14.5 cents, and stand at US$1.767 per pound.
This is revealed by an analysis by the Chilean Copper Commission (Cochilco) that considers the 21 largest mining operations in the country and 94.4% of mine production during the first half of the year. According to the historical records of the Cochilco Cost Observatory, “the reduction observed in the first half of this year corresponds to the largest decrease since the first half of 2020, when the average cash cost registered a drop of 25.3 cents per pound compared to the same period in 2019,” explained the entity’s Mining Market analyst, Ronald Monsalve.
When comparing the cash cost of this first half of 2025 versus the same period of 2024, it is seen that there are upward factors, such as the increase in own and contractor provisions, the highest consumption of energy, fuels and supplies. Other market factors, such as the higher CPI and PPI in the United States, also have an impact at the local level, raising salaries, prices of materials and services, the expert details.
But these upward pressures are opposed by favorable market factors that weigh much more, such as the better prices of gold, which has risen 39% in the first half, and silver, which has risen by 26%, added to the decrease in refining and smelting charges for copper concentrates. The metals mentioned act as a credit because they are extracted when producing copper and are byproducts of this primary activity.
All of these last factors – pricing of by-products and refining and smelting charges – Together they impact 26 cents per pound of lower cost copper, summarizes Cochilco.
The state agency monitors the cash cost (C1), which is an indicator of the competitive position of a company or, in this case, a sector. Of the 21 operations considered by the indicator – including Escondida, Collahuasi, El Teniente, Los Pelambres, Anglo American Sur, Candelaria, Caserones, Sierra Gorda, Centinela, Antucoya, Zaldívar, among others – 12 decreased costs and they are the largest mining companies, because they account for 79% of production. In this group, the average net cost reaches US$1,564 per pound produced.
Meanwhile, nine companies – equivalent to 21% of production – increased the cash cost and in this group the cost is much higherUS$2.50 per pound.
For the end of 2025 and 2026, a scenario of relative stability in operational costs is projected. supported by various market factors, explains Monsalve.
Firstly, “the global balance of copper concentrates is expected to continue in a deficit condition, which would tend to keep treatment and refining charges limited, favoring unit production costs. Likewise, prices of by-products, particularly gold and silver, would remain at high levelsdriven by economic and geopolitical uncertainty, as well as by the policy of accumulation of gold reserves by central banks, which has sustained its demand and price.
Additionally, the Cochilco expert adds, “An eventual expansion of copper production in the country during 2026 could contribute to downward pressure on costs.”
As a whole, but conditioned on the evolution of the prices of critical inputs and possible contingencies that could arise, Monsalve concluded.
