Codelco's decision to suspend development of the Andes Norte section at its flagship El Teniente mine could last up to two years, according to a union leader, worsening production challenges at the world's largest underground copper mine and further tightening an already strained global copper market. Chile is the world's top copper-producing nation, and Codelco — the state-owned national copper company — is its largest producer, meaning prolonged disruptions at El Teniente ripple across the entire global supply chain for a metal essential to electric vehicles, power grids, and renewable energy infrastructure.

The expansion pause follows new geological studies revealing greater seismic risks than previously understood. The Chilean state copper company said the decision was made to safeguard workers after six months of analysis identified an emerging seismic phenomenon tied to the greater depth of the Andes Norte project.

"The available evidence is consistent with the possible existence of an emerging risk associated with the greater depth of the Andes Norte project," Codelco said this week. "These analyses have identified the existence of an emerging seismic phenomenon with characteristics different from the risks that have historically been known and managed in the operation."

The Andes Norte project sits adjacent to the Andesita and Teniente 7 mining areas, where a rockburst in July 2025 killed six workers and forced production halts across portions of El Teniente. That collapse, equivalent to a magnitude-4.2 earthquake, remains under criminal, regulatory, and technical investigation.

Supply squeeze

The setback comes as Codelco struggles to rebuild output after production fell to a 25-year low. El Teniente's copper production dropped roughly 27% year over year in the first five months of the year. The company's new chairman has acknowledged that Codelco's target of returning to 1.7 million tonnes of annual copper production by 2030 is no longer achievable.

The disruption compounds mounting concerns over global copper supply. Mining companies worldwide are pushing deeper underground as aging operations become depleted and average ore grades continue a multi-decade decline, increasing exposure to geotechnical risks like those surfacing at El Teniente — a century-old mine with more than 4,500 km of tunnels beneath the Andes.

Physical copper markets are also tightening. CRU's latest Copper Monitor warned of a growing risk of a near-term squeeze on the London Metal Exchange, citing low on-warrant inventories, dwindling visible Chinese stocks, and heavy U.S. imports ahead of a possible tariff decision. The report noted that one participant now controls between 50% and 79.99% of live LME copper warrants, while nearby futures positions are concentrated among a small number of long investors.

The tightening supply outlook pushed Comex September copper to an intraday record of $6.7045 per pound ($14,781 per tonne), surpassing the previous high set in May. The contract later traded at $6.683 per pound, up 0.6% on the day, 7.3% over the past month, and more than 50% from a year earlier.

Chile has reported its weakest second-quarter copper production in nearly two decades. Copper markets are increasingly being driven by supply risks rather than demand, with Codelco's prolonged disruption adding fresh uncertainty as inventories remain historically tight and traders continue shifting metal into the United States ahead of potential import tariffs. With new mine projects facing long lead times typically exceeding a decade from discovery to first production, the supply response to tightening conditions is likely to be slow, leaving markets exposed to further disruptions at major operations.