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Ample copper supply in 2022 and 2023 is expected to keep the market balanced, but as economies shift to renewables, miners will need to start investing in new capacity immediately to meet the pick-up
in demand growth.
Currently, copper prices are around $9,900 per tonne, close to the record high of $10,190 per tonne set in February 2011 and well above what is needed to make profits for new and expanded projects
.
After the price fell below the minimum profit threshold, many projects were put
on hold after 2013.
William Tankard, analyst at Wood Mackenzie, said: "By 2030/2031, we will see a supply gap
of 4.
5 million tonnes of undeveloped project capacity.
There is an urgent need to continue technical research, mine licensing and financing work to maintain supply trends so that the pace of demand growth can be kept pace in the medium term
.
”
Most of the projects that came into production in 2022 and 2023 were approved
in 2017 and 2018.
These projects include the expansion of BHP Billiton's Spence mine in Chile, which is expected to reach full capacity next year, producing 300,000 tonnes of copper
per year by 2026.
Anglo American's Quellaveco project in Peru is expected to produce 300,000 tonnes per annum
from 2023.
JPMorgan analysts said in a note: "In the last price increase cycle of 2016-2018, $25 billion worth of projects with an annual capacity of 1.
8 million tons
was approved.
The supply of these projects will enter the market
within the next three years.
”
When copper prices were around $6,500 per tonne, many projects were approved
.
According to Michael Widmer, an analyst at Bank of America, copper prices are higher now, but mining companies are not committed to investing
.
"To meet copper demand, miners will need to spend $60 billion a year on capital expenditures by 2025, but this year it is expected to reach $45 billion
.
"
Bank of America estimated decarbonization-related copper demand at 2.
35 million mt last year, or 10%
of the global total.
This figure is expected to increase to 4 million tonnes in 2025 and 5.
2 million tonnes
in 2030.
Ample copper supply in 2022 and 2023 is expected to keep the market balanced, but as economies shift to renewables, miners will need to start investing in new capacity immediately to meet the pick-up
in demand growth.
Currently, copper prices are around $9,900 per tonne, close to the record high of $10,190 per tonne set in February 2011 and well above what is needed to make profits for new and expanded projects
.
After the price fell below the minimum profit threshold, many projects were put
on hold after 2013.
William Tankard, analyst at Wood Mackenzie, said: "By 2030/2031, we will see a supply gap
of 4.
5 million tonnes of undeveloped project capacity.
There is an urgent need to continue technical research, mine licensing and financing work to maintain supply trends so that the pace of demand growth can be kept pace in the medium term
.
”
Most of the projects that came into production in 2022 and 2023 were approved
in 2017 and 2018.
These projects include the expansion of BHP Billiton's Spence mine in Chile, which is expected to reach full capacity next year, producing 300,000 tonnes of copper
per year by 2026.
Anglo American's Quellaveco project in Peru is expected to produce 300,000 tonnes per annum
from 2023.
JPMorgan analysts said in a note: "In the last price increase cycle of 2016-2018, $25 billion worth of projects with an annual capacity of 1.
8 million tons
was approved.
The supply of these projects will enter the market
within the next three years.
”
When copper prices were around $6,500 per tonne, many projects were approved
.
According to Michael Widmer, an analyst at Bank of America, copper prices are higher now, but mining companies are not committed to investing
.
"To meet copper demand, miners will need to spend $60 billion a year on capital expenditures by 2025, but this year it is expected to reach $45 billion
.
"
Bank of America estimated decarbonization-related copper demand at 2.
35 million mt last year, or 10%
of the global total.
This figure is expected to increase to 4 million tonnes in 2025 and 5.
2 million tonnes
in 2030.
