Chile’s aging copper mines have been battered by deadly accidents, extreme weather and operational missteps, raising questions over how quickly the world’s biggest producer can recover from its lowest output in more than two decades.

At least seven workers have died at Chilean mines in the past month, including two in an avalanche at Codelco’s El Teniente operation. Severe rain and snow have repeatedly disrupted mines and infrastructure, while simmering labor tensions are adding another layer of uncertainty even after workers at an Antofagasta Plc mine ended a strike and BHP Group narrowly averted a walkout at Escondida, the world’s largest copper mine.

The troubles are playing out as traders, producers and investors gather for LME Week in London, where faltering mine supply is likely to be a key topic as participants negotiate contracts for 2027.

While tariff-related trade flows have been the main driver of record copper prices this year, mining problems are another critical factor, particularly in Chile, which accounts for more than 20% of global mined supply. The setbacks are increasing the likelihood of the first annual decline in global mine output since 2017 — just as demand from data centers and power-grid expansion accelerates.

The recent spate of extreme weather is exposing a longer-term dilemma for an industry built around Chile’s historically arid conditions. It also offers a glimpse of what could lie ahead for mines and infrastructure as a powerful El Niño develops. Higher summer temperatures risk causing ice masses to shift at high-altitude operations, threatening pit stability and transport routes.

“There’s clearly a strong influence from climate change and the mining sector’s limited ability to adapt,” said Cristian Cifuentes, head of research at Chilean copper-study center Cesco.

Weather disruptions are landing on top of more fundamental hurdles. Chile’s giant mines are growing older; pits are getting deeper and ore quality is deteriorating, meaning companies have to move and process more material to produce the same amount of copper. Jefferies analysts estimate Chilean open pits experience about a 2% annual natural production decline, with recent investment not enough to offset it.

Chile is in a “major mining recession,” Finance Minister Jorge Quiroz said in September. He expects output to fall about 7% this year before partially recovering in 2027. A decline of that magnitude would put production at roughly 5 million metric tons, the lowest annual level since 2003. Back then, global demand was about 45% lower and Chile accounted for more than a third of the world’s mined copper, just as China’s commodities boom was dawning.

A decade ago, the Chilean state copper commission Cochilco estimated the country had the potential to produce 8.5 million tons by 2025, if projects in the pipeline were realized. Even in 2022, the agency was forecasting 6.4 million tons for 2025. Instead, new projects and expansions have repeatedly failed to offset declining grades and maturing mines.

There’s considerable debate over how bad this year will be and how quickly production can recover. Cochilco forecasts a 2.6% decline this year before a 5.2% rebound in 2027, while consultant CRU Group is set to lower its forecast for a roughly 3% drop to something closer to 5%, analyst Nicolas Muñoz said. CRU expects it will take until 2030 for Chile to return to 6 million tons, given the shortage of large new projects.

“It’s not because we are pessimistic, it’s because we don’t have a technical reason” to expect a faster recovery, Muñoz said.

Codelco lies at the heart of the issue. The state-owned producer is struggling to stabilize output after a yearslong decline amid false starts at projects to overhaul aging mines. Fatal accidents and weather interruptions have plagued its largest mine, while Codelco is investigating potential irregularities in production figures from 2024 and 2025.

The company is changing course under Chairman Bernardo Fontaine, tempering the previous administration’s drive to restore production to historical levels in favor of productivity and profitability. The shift could ultimately mean a smaller workforce as Codelco seeks to contain costs and maximize value from its existing operations.

That points to a two-sided risk for Chilean supply. Codelco’s heavy debt load and strained finances complicate the investments needed to stabilize and grow production. But even cash-rich producers face deteriorating ore quality, extreme weather and increasingly difficult geology.

Output at BHP’s Escondida plunged 28% from a year earlier in August. Production at Collahuasi, owned by Anglo American Plc and Glencore Plc, fell 25%, which a union leader attributed to weather and maintenance among other factors. It hasn’t been all doom and gloom, with Antofagasta reporting growth in the third quarter, albeit slower than analyst expectations.

Labor tensions remain a flashpoint. More than 1,000 supervisors and staff at Escondida accepted a last-minute agreement that averted a strike, while 709 workers at Antofagasta’s Centinela returned to work after a strike lasting more than a week. Codelco is seeking to recover bonuses paid to employees after correcting overstated production figures.

BHP’s Spence mine is suing its workers’ union over stoppages it alleges were illegal. The union described the lawsuit as an intimidation tactic, saying it distorted a dispute rooted in longstanding health and safety concerns.

Jefferies analysts say structural constraints mean increasingly heavy investment will be needed just to maintain output. CRU has turned more optimistic on copper as supply concerns mount, forecasting prices to average about $6.20 a pound in 2027, well above its June outlook. Still, that’s below current levels of around $6.60.

Cesco’s Cifuentes cautions against interpreting this year’s slump as the start of an inexorable decline. He expects Chile to eventually return to growth, albeit too slowly to maintain its share of global production. That will require private projects to materialize, Codelco to execute its structural investments and new technologies to unlock more from existing resources.

“The market will have to get used to a Chile that is stagnant and has a smaller share, rather than a Chile in free fall,” Cifuentes said.