The world’s largest copper mine, Escondida in Chile, owned by BHP (ASX: BHP), is gradually resuming production after a fatal safety accident; meanwhile, tight inventories combined with strong demand continue to weigh on the copper market. On the day the Escondida mine’s production was interrupted, COMEX copper prices hit a record high of US$6.83 per pound, before easing to US$6.76 per pound in early trading on Friday. Alejandro Tapia, Asset President of Escondida, issued an official statement confirming the fatal accident.

BHP said in an emailed statement: “The company is still assessing the conditions for the mine’s phased resumption of operations, taking into account factors including employee wellbeing, operational readiness, risk control measures and the requirements of regulators.”

The Escondida mine is located in Chile’s Atacama Desert, about 170 km southeast of Antofagasta. In BHP’s 2026 fiscal year, the mine produced about 1.3 million tonnes of copper. BHP holds 58.5% as the mine operator, Rio Tinto (LSE, ASX, NYSE: RIO) holds 30%, and Japan’s JECO holds the remaining 12.5%. The timing of the incident has once again drawn attention to a copper market that already has almost no supply buffer. Domestic inventories in China are at cyclical lows, and the country is about to enter a series of holidays that will temporarily interrupt restocking activity; at the same time, global refined copper consumption continues to exceed supply.

Tightening supply
According to BMO Metals data, copper inventories on the Shanghai Futures Exchange stand at about 47,000 tonnes, near cyclical lows. China will observe the Mid-Autumn Festival from September 25–27 and the National Day Golden Week from October 1–7.

During the holidays, Chinese downstream consumers are expected to pause restocking, and physical demand will weaken temporarily. But BMO Metals noted that recent copper price pullbacks have been small and short-lived, because copper processors cannot postpone raw material purchases for long.

The underlying supply picture for copper is also tight. According to International Copper Study Group (ICSG) data, global annualized copper mine production in July was 23 million tonnes, down 4% from June; refined copper demand rose 3% year-on-year to an annualized 29 million tonnes, while refined copper supply fell 1% to 28.4 million tonnes.

The supply-demand gap means refined copper consumption exceeded supply in July, which explains why copper prices have remained firm even as Chinese purchasing enters a seasonal lull.

The Escondida mine has a pivotal influence on the global copper supply-demand balance. In the previous fiscal year, BHP’s total group copper production was about 2 million tonnes, and the copper business for the first time contributed more than half of the mining company’s EBITDA. The company also plans to build a new concentrator for the Escondida mine, and with this project portfolio aims to increase group copper production by about 40% by fiscal 2035.