Everyone’s life could probably use a little shaking up once in a while, but we hope it won’t be a 8.8 earthquake. That’s what hit Chile on Saturday, Feb. 27, 2010.
The epicentre was offshore, southwest of Santiago. Hardest hit was the coastal city of Concepcion, the country’s second largest town. Tsunami warnings were issued to locations across the South Pacific and north as far as Vancouver. Loss of life was reportedly less than a thousand people, however, property damage may exceed US$8 billion.
If I owned a copper or gold mine high in the Andes Mountains, my worst fear might be the damage that an earthquake could cause. Loss of life, loss of production or a breach of the tailings dam could occur within minutes. Fortunately, my worst fears were not realized.
The mines of Chile were little impacted by the earthquake. Producers including Barrick, Teck, Breakwater, Kinross, Quadra, Codelco, BHP Billiton, Anglo American, Xstrata and Freeport-McMoRan lost power temporarily, but their operations were undamaged. News from junior companies is likewise encouraging. Caterpillar equipment supplier Finning said its Santiago head office was damaged but not its mine site operations.
So mining goes forward almost uninterrupted.
One measure of the seriousness of the earthquake would be its projected impact on the copper price. Chile is the world’s No.1 copper producer with annual output of nearly 5.4 million tonnes, roughly four times as much as its nearest rival, Peru. The supply has not been interrupted, and analysts have said that the earthquake will have only small, short-term effect on prices.
I am thankful that the Chilean mining industry was not disrupted by the catastrophe last month. The backbone of the country’s economy is intact even though individuals have suffered greatly.