Antofagasta Says Price of Copper May Have Found a Bottom

SANTIAGO, Chile--The price of copper may have found a bottom, even as the market for the beaten-down industrial metal faces its first supply glut in four years, the chief executive of Chilean miner Antofagasta PLC (ANTO.LN) said Monday.

Prices for copper, which have fallen more than 9% this year, may have already seen the worst of a slowdown in China, the world's largest consumer of the industrial metal, Antofagasta Chief Executive Diego Hernandez said in an interview with The Wall Street Journal.

"At least in the short term, there is no reason why copper should go any lower," the former chief executive of state-owned Chilean copper miner Codelco said.

Antofagasta has no plans to shut any of its mines ahead of a surplus the company estimates could be between 300,000 and 400,000 tons this year and persist until at least 2015, Mr. Hernandez said.

Mr. Hernandez is joining other top mining executives, among them Codelco CEO Thomas Keller, Anglo American PLC's (AAL.LN) head of copper Hennie Faul and Rio Tinto PLC (RIO) copper chief Jean-Sebastien Jacques, at the 2014 Cesco copper conference in Chile, the world's biggest producer of the metal.

London-listed Antofagasta, 65%-owned by the Luksic family, saw its earnings slump by more than a third last year, after a sharp fall in the metal's price offset the company's increased production. Still, the company plans to spend $3 billion on three key projects between now and 2018, in a bid to boost its copper production to 900,000 metric tons, from 721,000 last year, it said on March 18.

"If the price of copper goes up, we want to be there in a big way," Mr. Hernandez said.

Copper prices fell to a three-and-a-half year low last month, as the first Chinese domestic corporate bond default sparked fears of instability in the country's banking system. Some Chinese companies use copper to obtain low-interest loans and invest the funds in higher yielding local instruments. Some investors believe falling copper prices could spark a downward spiral in the market, where borrowers are forced to sell more copper to cover losses or raise money.

Such a scenario is unlikely, Mr Hernandez said, as the recent drop has demonstrated companies are more than willing to hold on to their copper, even amid a drop in prices.

"We have not seen inventory coming back in the market, even though prices went down," he said.

He said it was to early to gauge how tax hikes by newly-minted Chilean president Michelle Bachelet will effect the mining industry. Ms. Bachelet's pledge to boost corporate taxes to 25% from 20% in a bid to address income inequality has met opposition from some businesses, who say it will hurt growth and cool investment in the South American country.

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