Máximo Pacheco, Codelco’s Chairman of the Board: “The work that CESCO carries out, both in Chile and in Asia through Asia Copper Week, is essential for the development of our strategic marketing plans”

We spoke with Codelco’s chairman a few weeks before a new version of Asia Copper Week. Pacheco, who will be the keynote speaker at the Asia Copper Dinner, reflected on the role that China plays in the future demand for copper, the relationship of this country with the state company, and the part of this meeting for the development of Chilean mining.

After two years of virtual activities, a new version of Asia Copper Week will be held between November 22 and 24, where representatives of the copper mining industry will meet with their smelter peers. This year, and exceptionally, the meeting that traditionally takes place in Shanghai will be moved to Singapore due to the restrictions in China concerning Covid-19.

During the main dinner, Máximo Pacheco will participate as the main speaker at the Asia Copper Dinner, an event with more than 700 executives who have confirmed their attendance, who traditionally meet in Shanghai to strengthen relations with the most significant copper consumer in the world.

“We project that we will continue to strengthen ties with China,” says Pacheco, since “the energy transition and sustainability challenges the planet faces summon us to the common goal of being protagonists of the future, with an increasingly  green and traceable mining.”

A unique opportunity

-How do you see China’s demand for copper in the medium and long term?

According to analysts’ forecasts, China’s copper demand continues to grow, with a rate of 0.6% for 2022-2050. The Asian country is developing urban expansion plans hand in hand with the electrification of its processes, which explains this increase. In addition, its public policies seek to promote the real estate sector, with a reduction in rates by the Central Bank and the relaxation of purchase conditions by the market. In the same way, electromobility continues to grow at significant rates due to state franchises that reward its incorporation, and we already know that this means a more substantial need for copper.

In the short term, this 2022, China’s demand for refined copper will reach 12.8 million tons, that is, 52% of world consumption, and next year it will grow to a level close to 13 million tons. However, some elements are holding back further economic growth, such as Covid-19, which this year even forced the closure of cities; the heat wave that affected the country this summer and that implied energy restrictions; and some situations in the real estate market related to financial risks of the construction companies and their low sales.

What are the main drivers that would drive this demand?

The opportunity we have today as an industry is unique. The threat of climate change is driving the world into an unprecedented energy transition process. Today, 56% of the world’s population is urban. By 2050, this figure is estimated at 68%. Growth is expected to come through sustainable urbanization, with green cities powered by renewable energy and sustainable transportation.

Copper is part of the solution to these global challenges, as it is a metal intensively used in renewable energy generation and electromobility. And it is essential for the construction and operation of today’s and tomorrow’s cities. For this reason, it is estimated that by 2050, the consumption of refined copper will at least double the current level.

In this sense, China’s energy transition as a great driver of copper demand is reflected in its commitment to achieving zero net emissions by 2060. It is estimated that by 2025, one-third of China’s electricity will come from renewable energy processes. Electrification, through renewable energies, added to the strong push for electric vehicles, sustains consumption in the medium and long term, representing excellent news in the face of the sustainability challenges imposed by the climate crisis.

As the largest copper producer in the world, how relevant is the relationship with the Asian giant?

Of the most significant relevance. China is the primary consumer market for copper worldwide and represents a substantial percentage of our global sales, so we work hard to maintain a robust long-term business relationship.

Codelco is the leading copper producer in the world. Still, it is also a company owned by the Chilean State, whose purpose is to be an engine of sustainable development for a more inclusive and innovative Chile that contributes to social mobility and better life quality for its inhabitants. Therefore, we must be attentive to the needs of our leading clients globally to generate more remarkable contributions to the world’s progress because Chile’s development also depends on that.

In commercial terms, China is important not only for the sale of our cathodes and copper concentrates but also for our molybdenum. And now, we seek to expand cooperation in other business areas, such as the supply of sulfuric acid.

I must be evident on this point: the possibilities with the Asian country are not limited to marketing. We permanently explore opportunities for collaboration in the development of technologies, knowledge exchange, and investment possibilities, among other aspects, to take advantage of the value that the Asian country has in areas in which ours needs to advance. For example, new foundry technologies and processes with less environmental impact strengthen our priority focus of being leaders in environmental protection in the mining industry in Chile.

How have relations been established between Codelco and the Chinese market over the time? How is it projected in the future?

Relations between Codelco and the Chinese market are long-standing, and we build and take care of them permanently, aware of their relevance for our country.

Since 2002 we have had an office in Shanghai to manage the commercial relationship with our clients directly. In 2007 we added an office focused on purchasing supplies for our operations to take advantage of the competitive and technological opportunities offered by Chinese suppliers.

What relevance does it have for national mining that there are meeting instances such as Asia Copper Week?

Cesco’s work, both in Chile and Asia, through Asia Copper Week is essential for developing our strategic marketing plans. Furthermore, it is a relevant instance to bring together the copper industry; an opportunity to get closer to our leading partners to exchange opinions and align visions. Today, more than ever, we must face together the threat of climate change with similar standards, supporting the energy transition process to achieve carbon neutrality at a global level. The use of copper plays a fundamental role in the sustainable development of our planet; therefore, our responsibility as producers is enormous, and at Codelco, we are willing to lead this contribution to the world of today and tomorrow.