The effect of these lower prices is starting to be felt in Chile, the world’s largest producer with over 5.7 million tonnes of output last year, Aurora Williams said.
She noted that tax revenues have fallen as a result of the lower copper price, while GDP has dropped to about 9% from around 14% recently.
“Research suggests that we are likely to see extended periods of lows and highs,” she told a briefing in London.
“The lower cycle will be longer than we have seen before,” she added.
This means copper is unlikely to return to all-time highs of above $4 per lb, as seen during the super cycles, she told the briefing.
“The market is of course still subject to some collateral effects,” Williams said, citing potential delays in projects which could impact prices as demand rises.
“We would like to see our public companies be even more independent and self-governed, with minimal day-to-day influence from government,” she added.
Williams said that Chile has a roadmap for the next 20 years focused on collaboration between the public and private sectors.
There are five key areas for this roadmap, comprising tailings, smelting and refining, milling operations and planning, concentration of minerals and hydro, she added.
After discussion earlier this year, there are now 29 productivity measures for mining companies in place, she told the audience during LME Week in London.
While Chile’s copper output is around 30% of world production, with the next largest producer being Peru with around 1.7 million tonnes annually, Williams said she expects output to return to higher levels in 2018.
But she noted lower grades and struggles with older projects, adding that Chile needed to attract foreign investment to stay competitive and target its reserves, which account for around 29% of world output.
“Investment in Chile’s copper industry declines as the market price declines,” she said.
At its peak, foreign direct investment in Chile was around $1.12 billion, but is forecast to more than halve to $49 million by 2020, Williams noted.
“Projects don’t disappear – they’re delayed, waiting for a better price and timing opportunity,” she added.
There are around 37 mining projects on the books in Chile out to 2020, of which 29 are in copper with the rest in gold, iron ore and others.
“We want to create value, and to work with the private sector; this is needed to tackle lower copper prices,” she said.
Williams said that a National Productivity Commission had identified a link between prices and productivity, especially in the mining sector.
Copper prices are expected to average $2.15 per lb (about $4,739 per tonne) this year and $2.20 per lb next year, with the red metal unlikely to return to super cycle highs, according to the mining minister of Chile.