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By Maytaal Angel and Amanda Cooper
LONDON, Oct 31 (Reuters) - Chile sees copper prices averaging $2.95 per lb next year, Chilean Minister of Mining Aurora Williams said at the LME Week industry gathering in London on Tuesday, citing a persistent market deficit.
Copper prices have risen some 24 percent so far this year to average $2.75 per pound, helped by strong growth in China, which accounts for about 40 percent of the roughly 23 million tonnes of copper consumed each year.
Chile, which produces about a third of the world’s copper, has adjusted its market deficit forecast for this year to 60,000 tonnes, the minister said, adding the shortfall is expected to persist throughout 2018, peaking in the second half.
Williams said she was optimistic on the price outlook for copper, but did not see a return to 2011 highs of above $4.00 per lb for the foreseeable future. Copper is seen as a barometer of economic growth because of its widespread use in so many different industries.
“It’s more important rather than looking at outright prices to look at the trend,” said Williams, adding that $3.00-3.20 could be achieved in the next decade given that volatility is likely to pick up.
“While we are in an environment of higher prices we remain cautious as we don’t want to lose sight of the achievements and adjustments we made when prices were much lower and costs had to be cut.”
Chile is on course to produce 5.5 million tonnes of copper this year, the minister said, adding that a pipeline of new projects could realistically see this rise to 6.3 million tonnes in the next decade.
Copper is integral to the Chilean economy, where copper-related activity can account for up to 15 percent of gross domestic product.
For every one cent increase in the average annual price of copper, Chilean exports grow nearly $125 million and tax revenues increase by $60 million, according to official estimates. (Reporting by Maytaal Angel; editing by Jason Neely, Greg Mahlich)