Supply tightness in the global copper market has gained another variable. The Centinela copper mine in Chile has broken out in its first strike in history, and JPMorgan has warned that if the labor dispute drags on, mine output and company performance could be significantly affected.

On October 9, Natalia Corfield, head of Latin American corporate credit research at JPMorgan, pointed out in a research note that the Centinela copper mine began a strike that morning after mandatory mediation talks between the company and the miners' union broke down. Corfield warned that if the two sides cannot reach an agreement, output and performance could be affected in a "very significant" way.

Centinela is the core copper asset of Antofagasta, producing 240,400 tons of copper in 2025, accounting for more than 35% of the company's total output. According to Bloomberg, citing reports from two unions participating in the strike, if the stoppage continues, the mine could begin cutting production in as little as about two weeks.

The strike comes as London copper futures trade at about $14,475 per ton, slightly below their all-time high. With copper prices running at high levels and global copper market supply under pressure, the Centinela strike has added new supply risk to the market.

Labor talks collapse, more than 700 workers join strike

The strike involves two unions, Minera Esperanza and Distrito Centinela, representing more than 700 workers in total. According to the JPMorgan research note, the dispute centers on differences in pay and benefits for employees doing the same work across different unions. The unions allege that Antofagasta rejected a plan to close the treatment gap and did not offer an alternative.

Mandatory mediation failed to bring the two sides to an agreement, leaving labor negotiations at an impasse. This is the first strike in the history of the Centinela copper mine. However, Corfield noted that Antofagasta has successfully defused potential strikes in the past. In 2020, after an initial contract was rejected and government mediation was extended, the company ultimately avoided an actual stoppage through negotiation.

The impact of this strike is not limited to short-term output losses. Centinela's annual copper production accounts for more than 35% of Antofagasta's total output, and if the stoppage continues, reduced mine output will directly affect the company's production and performance. In addition, the concentrator expansion project could also be delayed as a result, putting pressure on the company's medium- and long-term capacity growth. The unions expect that if the strike lasts about two weeks, the mine may begin to cut output.

Low inventories plus supply disruption put copper prices at risk of further gains

The Centinela strike comes as global copper market supply is already under pressure. Daniel Ghali, head of metals research at Deutsche Bank, warned last month that global copper inventories have fallen to "unprecedented lows," and stockpiling in the United States has further squeezed available supply in other regions. He expects London copper prices could rise by about another 50% by the second quarter of 2027, to $22,050 per ton.

Jeff Currie, former head of commodities research at Goldman Sachs, also said in August this year that factors such as tightening physical supply, currency depreciation and policy intervention are driving a repricing of scarce resources, and said bluntly: "Go long, fasten your seatbelt."

If the stoppage continues and ultimately leads to production cuts, supply pressure in the copper market could intensify further. However, the impact of the strike on actual supply and copper prices still depends on the progress of labor negotiations, the length of the stoppage and the resumption of mine operations.