Codelco’s El Teniente two-year setback deepens copper fears

Codelco’s decision to suspend development of the Andes Norte section at its flagship El Teniente mine could last as long as two years, according to a union leader, compounding production challenges at the world’s largest underground copper mine and tightening an already strained global copper market.

The expansion pause follows new geological studies showing greater seismic risks than previously understood. The Chilean copper giant said the decision was made to protect workers after six months of analysis identified an emerging seismic phenomenon associated with the greater depth of the Andes Norte project.

“The available evidence is consistent with the possible existence of an emerging risk associated with the greater depth of the Andes Norte project,” the company said. “These analyses have identified the existence of an emerging seismic phenomenon with characteristics different from the risks that have historically been known and managed in the operation.”

The project is adjacent to the Andesita and Teniente 7 mining areas, where a rockburst on July 31, 2025, killed six workers and halted production across parts of El Teniente. The collapse, equivalent to a magnitude-4.2 earthquake, remains under criminal, regulatory and technical investigation.

Supply squeeze

The latest setback comes as Codelco is already struggling to restore production after output fell to a 25-year low. El Teniente’s copper production was about 27% lower year over year in the first five months of the year, while the company’s new chairman has acknowledged its goal of returning to 1.7 million tonnes of annual copper production by 2030 is no longer achievable.

The disruption adds to mounting concerns over global copper supply. Miners worldwide are pushing deeper underground as ageing operations become depleted, increasing exposure to geotechnical risks similar to those emerging at El Teniente, a century-old mine with more than 4,500 km of tunnels beneath the Andes.

At the same time, physical copper markets are tightening. CRU’s latest Copper Monitor warned of a growing risk of a near-term squeeze on the London Metal Exchange, citing low on-warrant inventories, dwindling visible Chinese stocks and heavy US imports ahead of a possible tariff decision. The report also noted that one participant now controls between 50% and 79.99% of live LME copper warrants, while nearby futures positions are concentrated among a handful of long investors.

The tightening supply outlook helped lift Comex September copper to an intraday record of $6.7045 per pound ($14,781 per tonne), surpassing the previous high set in May. 

The contract later traded at $6.683 per pound, up 0.6% on the day, 7.3% over the past month and more than 50% from a year earlier. Chile, meanwhile, has just reported its weakest second-quarter copper production in almost two decades.

Copper markets are increasingly being driven by supply risks rather than demand, with Codelco’s prolonged disruption adding fresh uncertainty as inventories remain historically tight and traders continue to shift metal into the US ahead of potential import tariffs.