Reuters reported that Chile lowered its 2012 average copper price outlook to USD 3.52 per pound from a previous estimate of USD 3.85 and sees prices slipping to USD 3.48 next year.

State copper commission Cochilco said that the lower copper price forecast is chiefly due to downwardly revised GDP growth and industrial production in the main copper consuming countries, as well as lower demand expectations.

Copper prices have shed 12% since the beginning of May on mounting fears of deteriorating economic outlooks in top metals consumer China, the euro zone and the United States. But expectations for central bank stimulus measures amid signs of global economic weakness have helped to limit copper's downside, keeping prices locked in a trading range between USD 7,200 per tonne and USD 7,800 per tonne since mid May.

Chile which produces about one third of the world's copper is seen mining 5.404 million tonnes this year significantly down from a previous projection of 5.7 million tonnes. The reduction is larger than the output of No. 1 copper producer Codelco's giant Andina mine which produced about 234,400 tonnes of copper last year.

Chile's projected copper output would be 2.7% increase from last year's production. The Andean country is battling fiercely dwindling ore grades in its ageing mines, an uptick in labor actions, worker accidents and extreme weather. But some expansions of its behemoth mines and a few new deposits have lifted output in recent months.

Chile's 2012 production will be boosted by a recovery in the world No. 1 copper mine, Escondida, majority owned by BHP Billiton Limited as well as higher output from Anglo American Plc's disputed Los Bronces mine, Freeport McMoRan Copper & Gold Inc's El Abra and Antofagasta Minerals Plc's El Tesoro. But lower ore grades and operational problems will hurt output from state copper giant Codelco, Anglo and Xstrata Plc's Collahuasi, Freeport's Candelaria and BHP'S Cerro Colorado.

Source - Reuters

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