UPDATE 2-Chile cuts copper output and price forecasts for 2013

Mon Jul 8, 2013 4:48pm EDT

Related Topics

* Chile now seen producing 5.53 mln tonnes of copper this year

* World No.1 copper miner Chile fighting lower ore grades

* Copper prices seen at $3.27/lb vs previous view of $3.57/lb

SANTIAGO, July 8 (Reuters) - Chile cut its copper output forecast for the year to 5.53 million tonnes due to setbacks at certain mines, though production is still expected to jump from 2012 as a new deposit comes online, the mining ministry said on Monday.

In April, state copper commission Cochilco forecast the world No. 1 copper producer's red metal output would reach 5.58 million tonnes this year.

The lower estimate is due to delays at Japan's JX Holdings' Caserones mine and lower forecasts for output from the Spence and Esperanza deposits, run by global miner BHP Billiton and Chilean miner Antofagasta Minerals respectively, Cochilco told Reuters.

But production is still seen rising in 2013 as leading copper miner Codelco's new Ministro Hales mine comes on line at the end of the year and output grows at mega mines Collahuasi and Escondida.

In 2012, Chile boosted its copper production by 3 percent to 5.455 million tonnes.

The Andean country is seeking to boost results at its huge, aging mines, but sliding grades, soaring costs, labor unrest and energy woes could curb its ambitious plans.

Red metal output is seen climbing to 5.69 million tonnes next year, slightly down from Cochilco's previous forecast for 5.73 million tonnes.

COPPER PRICES

Cochilco also cut its view for 2013 average copper prices to $3.27 per lb from $3.57 due to a slowdown in top metals consumer China, the prospect of the U.S. Federal Reserve winding down its economic stimulus program, and a projected copper surplus in the period 2013-2017.

The price of copper, seen by some as a barometer for the health of the global economy, has fallen about 15 percent this year.

Copper prices are seen slumping further next year to average $3.15 per lb, the government said, down from a previous projection for $3.32.

A drop in metal prices poses a significant risk to the export-dependent Chilean economy, where copper accounts for roughly 60 percent of export revenue. Analysts have long warned commodities-focused Latin American countries should diversify their economies.

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