Top miners' Q3 2023 copper production rises on Australian, Peruvian output

Copper production from the top mining companies climbed 3.3% year over year in the third quarter, though persistent inflation dogged some copper producers on costs, according to S&P Global Market Intelligence data.

Output increased by 107,331 metric tons year over year to 3.4 million metric tons of copper in the third quarter, based on an analysis of the top 20 copper miners with publicly available production announcements. The top miners churned out 2.9%, or 93,979 metric tons, more copper quarter over quarter.

Still, strong output left some analysts unimpressed as it came with higher costs for some miners and stagnant pricing for the base metal.

"Overall, we view Q3 as a negative quarter with higher costs the driver of our disappointment, despite production generally meeting our expectations," Alex Terentiew, an analyst at Stifel Nicolaus Canada, said in a Nov. 12 note. "While inflation has moderated, we don't see costs deflating, with pressure on labor, consumables and parts persisting."

As in the previous quarter, Anglo American PLC's copper output grew the most on an absolute basis, up by 62,300 metric tons, or 42.4%, to 209,100 metric tons year over year. The increase comes on the back of relatively new production from the company's Quellaveco mine in Peru, which produced its first copper concentrate in July 2022.

BHP Group Ltd. followed Anglo American with the next biggest year-over-year jump in production on an absolute basis. The diversified miner's third-quarter output totaled 457,000 metric tons, climbing by 46,900 metric tons, or 11.4%, compared to the same period of 2022.

"We saw strong underlying operational performance in the first full quarter of production from the newly-integrated Copper South Australia," BHP said in an Oct. 18 operational update.

Production from BHP's Australian copper unit jumped 44% year over year to 71,700 metric tons in the quarter ended Sept. 30, according to the October update.

Freeport-McMoRan Inc. and Codelco reported the deepest drops in copper output on an absolute basis. Freeport production decreased by 56,245 metric tons, or 14.7%, year over year to 325,679 metric tons, while Codelco reported a 13.5% decrease, or 44,000-metric ton fall in output, to 282,000 metric tons.

"This lower production was mainly due to the drop in mineral processing at El Teniente," Codelco said in an Oct. 26 production update, pointing to interruptions caused by intense rain earlier in the year as well as a seismic event in July. Codelco's falling production follows a pattern of declining output in recent years that the state-owned miner has been working to reverse.

On earnings calls, mining executives pointed to high inflation and relatively weak copper prices as a source of pain that not only drags on profits but investment in new copper mine builds, which analysts expect will be needed to meet increasing metal demand related to the energy transition.

"I mean, at one point, [a $3.50 per pound] or $4/lb copper price was considered to be a very strong price," Richard Adkerson, Freeport chairman and CEO, said on an Oct. 19 earnings call. "But with the effects of inflation, it's not the same."

The London Metal Exchange spot price of copper has largely traded between $3.50/lb and $4/lb through 2023, according to Market Intelligence data.

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