Effect: Short-term bullish
Chile is experiencing the longest drought in decades, causing water shortages.
Key Chilean copper regions see rainfall decrease by 30% in 20 years.
Chilean miner Antofagasta (LON: ANTO) says water shortages, combined with unexpected lower grades could cause copper supply to drop by up to 700K tonnes in 2022.
ANTO’s copper production already dropped 1.7% in 2021.
This could be bullish for copper, as the supply is years away from seeing any growth, but the demand is growing by the day.
Antofagasta says it could build a desalination plant to deal with water shortages. This adds to their ASIC in the first place, but it also potentially helps them provide a long-term solution.
Anto already said 2022 CAPEX will be $200M (11%) more than expected.
They anticipated cash costs to go from $1.20 in 2021, to $1.50 in 2022. Continued draught and investments in desalination equipment could push expenses higher in the short term.