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Chile copper production up in October

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Chilean government statistics revealed today that Chile's copper production in October grew 1% when compared to the October 2010 level to 466,822 metric tons. This output is 6.9% higher than the September level.

Chile is the world's biggest producer of copper, accounting for roughly a third of the world's annual copper supply. So production from the country is extremely important to the global copper market -- as embodied by the copper ETF JJC ( quote ).

But while the month-to-month numbers were encouraging, copper output from the country is still down year-on-year in the January to October period by 3.9% to 4,282,357 metric tons according to the National Statistics Institute.

The Andean country has struggled in recent years to keep growing the absolute level of its copper output. That can be blamed on the aging of Chile's mines, forcing mining companies to mine lower-grade ores at a much higher per-ton cost.

It is hoped that production will increase in the years ahead as existing mines are expanded and new mines -- such as the Esperanza project being developed by Antofagasta ( ANFGY , quote ) -- come online.

Nonetheless, while Chinese demand for copper seems robust, constraints on supply have been a significant factor keeping prices of the key industrial metal supported. Too much production coming online too fast could paradoxically hurt the copper group by creating at least a short-term glut of the metal -- so any weakness from Chile may be a positive for the producers and JJC itself.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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