The case of Escondida, situated in the Atacama Desert, is particularly significant because the projected decline in production comes despite operational improvements at the mine. File Photo by Pedro Tapia
SANTIAGO, Chile, Aug. 24 (UPI) — Escondida, the world’s largest copper mine, is preparing to reduce production in Chile, projecting output will fall by 300,000 metric tons to 1.1 million metric tons in 2027 as ore grades decline.
The outlook has raised concerns across Chile’s mining industry, where declining ore grades are expected to affect production more broadly.
As large mines age, companies must extract and process more rock to obtain the same amount of copper, increasing their energy, water and investment requirements.
“Chile’s weighted average ore grade fell from 1.13% in 2002 to 0.62% in 2024, a decline of nearly 45% in just over two decades. To produce the same ton of refined copper, nearly twice as much rock has to be moved, crushed, ground and floated, and that rock is harder and deeper,” Víctor Pwrez, a mining specialist and professor at Adolfo Ibáñez University’s School of Engineering, told UPI.
Pérez said the case of Escondida, situated in the Atacama Desert, is particularly significant because the projected decline comes despite operational improvements at the mine.
“The world’s largest and most efficient copper operation has deployed its full arsenal of productivity measures and technologies, and even so, ore grades continue to significantly constrain production,” Perez said.
The impact goes beyond lower output. Lower copper concentrations require companies to process more material, directly increasing operating costs and resource requirements.
“Chile is estimated to produce 5.27 million metric tons in 2026, a 2.6% decline from 2025, driven by lower production at Codelco, Escondida and Spence as well as structural constraints. By 2027, we could reach around 5.5 million,” Perez said.
Electricity consumption by the industry, however, is expected to increase by more than 20%. Concentration, the process used to separate valuable minerals from waste rock, is projected to account for 55% of the sector’s electricity consumption, while water requirements are also expected to rise, including for desalination and pumping water to mining operations.
Pérez said deteriorating ore grades require Chile to add new capacity even before it can consider increasing overall production.
“With grades declining by around 2% to 3% annually, the country needs to add new capacity equivalent to more than 100,000 metric tons each year just to avoid falling behind,” Pérez said.
Gonzalo Escalona, founder of consulting firm E-Consulting Chile, said mining companies are being forced to commit significant amounts of capital not necessarily to expand capacity but to maintain historical production levels and offset the natural decline of aging mines.
Analysts say mining companies are increasingly directing investments toward offsetting declining ore grades rather than adding new production.
Ronald Guzman, a geology professor at Universidad del Desarrollo’s School of Engineering, said maintaining current production levels has become a challenge requiring increasing amounts of capital.
“The only way Chile can remain an anchor of global supply is to replace tonnage with technology, including preconcentration, online sensors and sulfide leaching, and to develop the few greenfield projects that remain,” Guzman said.
Escondida plans to invest up to $5.9 billion in a new concentrator.
At the national level, Guzman said Chile has a portfolio of mining investments totaling $104.55 billion through 2034. He cautioned, however, that a significant share involves projects designed to offset deterioration at existing operations rather than add new supply.
The challenge takes on greater significance because difficulties in increasing production coincide with expectations for growing global copper demand.
Guzmán said Chilean copper production fell 1.6% in 2025 and is projected to decline another 2.6% this year to 5.27 million metric tons, representing about a quarter of global mined copper supply.
“When the world’s largest producer moves backward, the market has no way to replace that supply quickly,” Guzman said.
Pérez said rising global demand is coming at a time when Chile is unable to respond with higher production.
“The market will resolve that imbalance through prices and supply from other mining jurisdictions, even though we as a country maintain our position as the world’s leading producer,” Perez said.
Guzmán said Chile’s share of global copper production has fallen from about 30% to roughly 24% over the past decade. Reversing that trend, he said, requires progress on three fronts: leading the adoption of processing technologies, shortening permitting timelines and making them more predictable, and advancing greenfield projects.
“The Escondida figures show that capital is available. What Chile is deciding now is whether that capital is deployed here or in another mining jurisdiction such as Peru, Congo or Argentina,” Guzman said.
