According to a research report from Orient Securities, the Mantoverde copper-gold mine in Chile faces a strike risk due to a deadlock in labor negotiations, which could potentially impact the incremental copper supply in 2026. Against the backdrop of high copper prices, intensified disputes over the distribution of benefits between mining companies and workers globally may become a latent risk point in the supply chain. The combination of supply constraints and demand growth continues to support the upward trend in copper prices, and the firm maintains a positive outlook on the medium-term investment value of the copper sector. The main views of Orient Securities are as follows:
The risk of a strike and production halt at Chile's Mantoverde copper-gold mine could increase uncertainty regarding supply-side increments for 2026. On December 25th, the union at the Glencore-owned Mantoverde copper-gold mine in Chile stated that if demands for wage increases and improved working conditions are not met in the new labor contract, an indefinite strike may be initiated. The company and the union have held three rounds of formal negotiations since November 2025, but no consensus has been reached. Given the current tight copper supply situation, the occurrence of a strike could heighten uncertainty around supply increments for 2026, thereby persistently driving copper prices higher.
Amid high copper prices, disputes over the distribution of benefits between labor and capital could become a latent risk point on the supply side. Although the threatened Mantoverde copper-gold mine in Chile has an estimated 2025 production of 29,000-32,000 tonnes, representing a relatively small contribution to overall supply, the firm believes that against the backdrop of persistently rising copper prices, disputes over benefit distribution between companies and employees are likely to increase the probability of copper mine strikes primarily driven by wage disputes. For instance, Chile's Escondida, the world's largest copper mine, experienced strikes in February 2017 and August 2024 due to issues like unfair wages and high safety risks when copper prices were rising. The 2017 strike resulted in a production loss of 210,000 tonnes for the mine, accounting for over 1% of total copper production that year, directly pushing copper prices to their highest level since May 2015. The 2024 strike, occurring during a period of tight global copper concentrate supply, also sparked panic and drove a short-term price increase. The firm argues that with copper prices currently at historical highs, disputes over benefit distribution between mining companies and labor are likely to intensify, becoming a latent risk point on the fragile mine-side supply chain, potentially exacerbating supply disruptions and consequently sustaining the upward pressure on copper prices.
The trend of supply constraints is the fundamental driver of rising copper prices, and the firm continues to be optimistic about the medium-term investment value of the copper sector. Since the Grasberg mine accident in September, the market has gradually formed a consensus on supply reductions resulting from such disasters. However, there is not yet full recognition that high copper prices could increase the likelihood of strike risks and intensify the fragility of the mine-side supply chain. Reviewing the factors driving copper prices higher, the firm believes that the fundamental issue of supply tightness remains the primary driver, and the uncertainty surrounding supply increments may persist due to disruptions such as seismic events and strikes. With downstream copper demand expected to see sustained growth, propelled by grid upgrades in Europe and the US and the global transition to clean energy, the firm maintains a positive outlook on the medium-term investment value of the copper sector and anticipates continued strength in copper-related equities once the market fully appreciates these dynamics.
Investment Recommendations and Targets: For the copper mining segment, it is advised to focus on Zijin Mining Group, which has substantial resource reserves and expectations for sustained medium-term production expansion. Other targets include: China Molybdenum Co., Ltd. and JCHX Mining Management Co., Ltd. For the copper smelting segment, it is advised to focus on Tongling Nonferrous Metals Group Co., Ltd., one of China's largest copper smelters, which has expectations for increased self-sufficiency in copper concentrate due to resource volume growth from the Mirador copper mine. Other targets include: Jiangxi Copper Company Limited.
Risk warnings: Risks include macroeconomic fluctuations leading to lower-than-expected downstream copper demand, and the risk of supply surplus due to higher-than-expected production volume from copper mines.
