Goldman Sachs: Chile copper output outlook sharply downgraded; labor negotiations in 2027 raise supply risks

What has changed in Chilean copper supply?

A year ago, the Chilean Copper Commission forecast that 2026 copper output would grow year over year by 3.7% to 5.61 million tonnes. It now expects output to fall year over year by 8.4% to 4.94 million tonnes, a reduction of about 670 thousand tonnes in the output forecast and a deterioration of about 12 percentage points in the expected growth rate.
Copper prices have risen 50% over the past three years, but Western miners have still struggled to achieve planned output. Excluding the production ramp-ups at Escondida and QB, Chilean copper output has fallen by about 20% since 2020. Weather, safety incidents, aging mines and underinvestment have all caused disruption; policy uncertainty has also been one reason for underinvestment.

Goldman Sachs estimates that, by the end of 2027, mines entering labor-contract negotiations will have combined copper output of about 3.45 million tonnes, representing 60%—65% of Chilean supply. The unions involved in negotiations represent about 40%—45% of the direct employees at these mines. The output of the mines involved indicates the scope of the negotiations, not the output expected to be lost.
The negotiations cover Los Pelambres, Spence, Escondida and several mines operated by Chile’s state-owned copper company. Escondida’s largest union will negotiate in August 2027; that union went on strike for 44 days in 2017.
Goldman Sachs does not consider widespread strikes its base case, but Chilean output is already under pressure as negotiations converge, so any additional shutdowns warrant attention.

Goldman Sachs believes stronger profit margins and cash flows at mining companies could raise unions’ pay expectations. Safety has also drawn more attention following several fatal accidents at large, mature mines. At the same time, the higher the copper price, the greater the value of production lost during a shutdown, and the greater the cost to mining companies and the Chilean economy.
However, high copper prices have not historically led inevitably to more strikes. Since Chile’s labor reform in 2017, strikes have caused relatively limited disruption to mine production, and disputes have increasingly been resolved through negotiation.
Recent agreements nevertheless point to high pay demands: the Escondida supervisors’ union reportedly reached an agreement involving bonuses of about 27 thousand dollars, about 25% higher in real terms than its previous agreement in 2023. Mantoverde and Centinela reached agreements after strikes lasting 35 days and 10 days, respectively.

According to Goldman Sachs estimates, BHP faces the greatest exposure through Escondida and Spence, involving about 75% of its copper output. Rio Tinto’s exposure through Escondida involves about 35%, while Lundin Mining’s exposure through Caserones involves about 40%.
Los Pelambres and Centinela, operated by Antofagasta, involve about 55% and 30%, respectively, of its copper output. Escondida and Caserones both have a history of strikes, and Centinela has also seen a recent strike; however, the union at Los Pelambres that is about to negotiate is smaller.
By contrast, Glencore’s Lomas Bayas and Anglo American’s El Soldado face less exposure, and neither mine has a history of strikes.