Deadly storm in Chile disrupts copper mines and raises AI supply concerns

A deadly storm in Chile threatens copper production and has added to concerns over the industry’s ability to supply the metal crucial to the AI boom.

Canadian base metals group Lundin Mining suspended operations at its Caserones copper–molybdenum operation in Chile’s Atacama region last week, where heavy snowfall had disrupted power supplies, while copper miner Antofagasta paused mining and processing for several days at its Minera Los Pelambres site.

The extreme weather caused flash flooding, as well as heavy snow at higher altitudes where some major copper mines are located. The storm has killed at least 13 people, according to officials.

Snow also affected some operations at state-run copper miner Codelco, where operations at major mines including El Teniente were temporarily halted. Executives at majors including Anglo American and BHP are also closely monitoring the situation and in touch with Chilean authorities.

Copper is essential for the build-out of electricity grids, renewable energy and the data centres that will power AI. But experts are forecasting a widening shortage of the red metal in the decades to come, with supply shocks likely to become more common as climate change accelerates and fuels extreme weather events.

Copper anodes ready for shipment at the El Teniente processing facility in Chile © Cristobal Olivares/Bloomberg

With copper stocks in the global network of London Metal Exchange warehouses already declining, “added supply risks like Chile are only upping the ante to copper price volatility”, said StoneX analyst Natalie Scott-Gray.

More broadly, mining investors “are increasingly trying to understand how physical [climate] risk translates into production disruption, cash flow, insurance costs and asset valuation”, said Giuseppe Amitrano, founder of risk analysis group WieldMore Investment Management. In a mining nation such as Chile, “even temporary disruption can matter for commodity markets”, he said.

Although miners typically bake…