Santiago - Global miner Anglo American should produce 3 percent more copper this year than last in part as the promising but troubled Collahuasi mine turns the corner after a tough 2012, the company's head of copper told Reuters.

“Our expectation for this year's output is 680,000 tonnes of copper for Anglo American,” Copper CEO John MacKenzie said in an interview on Friday ahead of the CESCO/CRU copper conference in Santiago this week.

The forecast increase would follow a 10 percent jump in output in 2012 thanks to the ramp-up of Anglo's star Chilean deposit Los Bronces.

While world No. 3 copper mine Collahuasi has enviable potential, it has often disappointed due to operational woes, labor unrest and its harsh Andean climate. Last year, its output nosedived to 282,100 tonnes from 453,300 tonnes the prior year, though Collahuasi's new CEO, Jorge Gomez, told Reuters in January that this year's production would jump.

However, a mill change undergone on March 20 could impact production, MacKenzie said. The mill, which is responsible for roughly two-thirds of production, should be reinstated at the beginning of May, he added. Collahuasi's output is down 19.2 percent for the first two months of this year, according to state copper commission Cochilco.

But ore grades, one of the biggest headaches for Chile's ageing mines, should improve in Collahuasi this year, MacKenzie added.

“At the end of the year we're going to reach a rhythm of 400,000 tonnes,” he said.

Expansion plans which seek to propel annual production to between 800,000 tonnes and 1,000,000 tonnes, are on hold until the mine achieves stability.

LOS BRONCES AT CAPACITY

The coveted Los Bronces deposit reached design capacity last August and has been able to maintain that rhythm to this day, MacKenzie said.

The flagship deposit was the heart of an a bitter dispute between Chilean state miner Codelco and Anglo last year, which culminated in a deal that saw Codelco take a slice of the asset.

MacKenzie rebuffed the long-rumoured possibility of unifying Los Bronces and Codelco's Andina mine, which are deemed the same geological deposit, but said the two companies were seeking cooperation.

“We're continuing to seek to maximise value for both companies,” he said.

Anglo is reviewing all aspects of its Peruvian Quellaveco copper project, which initially faced stiff opposition from local communities, to re-estimate costs.

“We need to verify costs and when we have all this we're going to make a decision,” he said. “I don't have the figures right now but obviously two years of inflation is going to have an impact.”

A widespread, surprise port strike in world No.1 copper producer Chile didn't significantly impact Anglo's concentrate shipments, he said, but did detain around 10,000 tonnes of the group's copper.

Demand from top metals consumer China should pick up in the second half of the year, according to MacKenzie.

The global copper market could tilt into a surplus this year and even through the next two years, he added. - Reuters