2021 Copper Industry Review

1. The field of new energy has become an important variable in the growth of copper consumption

The global low-carbon power generation equipment and new energy application infrastructure construction has begun, and copper as a conductive medium plays an important role in the construction of energy facilities. The annual copper consumption of global wind power photovoltaic installations and new energy vehicle production during 2021-2025 is estimated to be 927,000, 124.8, 157.6, 19.71, and 2.509 million tons, respectively.

Driven by the policies of major economies, the general trend of new energy development has begun. 2021 coincides with the beginning of China's 14th Five-Year Plan, and it is also the first year that China has embarked on its “carbon peak and carbon neutral” journey, and relevant policy deployments will be introduced intensively.

In Europe and the United States, the EU's emission reduction targets have gradually increased. In September 2020, the 2030 Climate Goal Plan stated that renewable resources will account for 38%-40% of final energy consumption by 2030. The United States also vigorously advocates new energy infrastructure construction because of Biden's election as the new president. It is estimated that 300 billion US dollars will be invested in clean energy and infrastructure funds. The construction of low-carbon power generation facilities such as wind energy and photovoltaics will enter a period of rapid growth. At the same time, the transformation of energy-using fuel vehicles to electric vehicles will become the main development trend.

1.1. Copper demand for low-carbon power generation

With policy escort, clean energy has great potential for development. China’s goal of achieving “carbon neutrality” by 2060 is also on the agenda, and clean energy sources such as photovoltaics and wind energy are also strongly supported by policies.

On December 15, 2020, the Director of the Department of Climate Change Response of the Ministry of Ecology and Environment stated that during the "14th Five-Year Plan" and "15th Five-Year Plan" period, China will further vigorously develop wind power and solar power generation. By 2030, the total installed capacity of wind power and solar power will reach more than 1.2 billion kilowatts.

Europe and the United States are working together. The European Union proposes that the proportion of renewable resources in final energy consumption will reach 38%-40% by 2030. After being elected as President of the United States, Biden changed the United States’ tradition of not attaching importance to the development of new energy and announced that it would invest 300 billion US dollars in clean energy and infrastructure funds.

The cost is reduced, and the competitiveness of low-carbon power generation and traditional power generation is improved. In the past decade or so, companies in the photovoltaic industry chain have mainly relied on policy subsidies to maintain their operations. However, after photovoltaic materials have experienced a significant drop in material costs, the cost of electricity has also fallen sharply. 2021 will most likely start the era of parity grid access. The continuous decline in photovoltaic power generation costs and the continuous decline in investment costs will be visible and doable in the short term.

From the data provided by Bloomberg Energy Finance, it can be seen that the cost of photovoltaic kilowatt-hours has experienced a significant decline. In 2010, the cost of electricity was 2.94 yuan, and by 2020 it fell to 0.72 yuan, a decrease of 76% in 10 years. The substantial reduction in the cost of photovoltaic power generation is mainly due to the reduction in the cost of photovoltaic installed components. In photovoltaic modules, silicon wafers dominate the main cost, accounting for 50-70%. In the past ten years, the photovoltaic industry chain has undergone technological changes, the large-scale market application of the Siemens condensation method to extract silicon materials, and the progress of diamond wire slicing technology, the cost of silicon wafers has dropped significantly, making it possible for photovoltaic modules to go online at a fair price. . The global average cost of 156mm monocrystalline silicon wafers has dropped from US$3.71/piece in 2010 to US$0.32/piece in 2020, a decrease of 91% in 10 years. The drop in installed cost has provided the photovoltaic industry with a strong competitiveness for grid parity.

The drop in power generation cost and policy support are superimposed on factors such as photovoltaic and wind power installed capacity usher in a period of rapid growth. In the field of wind power, copper is mainly used in cables, transformers and substations, while copper for photovoltaics is mainly concentrated in components such as transformers, inverters and cables.

It is estimated that by 2025, the global installed capacity of new wind power and photovoltaic power will reach 413GW, with a compound annual growth rate of 15.5% within 5 years. According to the International Energy Agency (IEA), the unit copper consumption of photovoltaic and on-road wind power installed capacity is 28.8 million tons/GW and 29,900 tons/GW respectively. From 2021 to 2025, the copper consumption brought about by global photovoltaic + wind power installations will be 6.81, 87.9, 102.22, 1.14, and 1.262 million tons, respectively.

1.2. New copper demand brought by electric vehicles

The development of global electric vehicles has entered a high-prosperity cycle. Major countries in the world have set electrification targets. China is proposing an electrification rate of 20% by 2025; Germany has proposed an electrification rate of 100% by 2030; France has proposed no fossil-fuel vehicles in 2040; Britain has proposed an electrification rate by 2035 Up to 100%.

The top-level design escorts the new energy automobile industry. In 2025, China will account for 20% of new energy automobiles. On November 2, 2020, the General Office of the State Council issued the "New Energy Vehicle Industry Development Plan (2021-2035)". By 2025, my country’s new energy vehicle market will be required to significantly increase its competitiveness, including power batteries, drive motors, and vehicle operating systems. Major breakthroughs have been made in other key technologies, and the safety level has been comprehensively improved. The average power consumption of new pure electric passenger vehicles dropped to 12.0 kWh/100km, and the sales of new energy vehicles reached about 20% of the total sales of new vehicles. In 2020, the sales of new energy vehicles were 1.33 million, accounting for only domestic vehicles in the same period. 6.6% of the total sales volume of 2014 million vehicles, the future market space is relatively large.

The continued increase in European policy has brought rapid growth in the new energy vehicle market. The European region has introduced the most stringent carbon emission regulations in history, and penalties for fuel vehicles with excessive carbon emissions have been increased. The European Parliament and the Council of the European Union have entered into force in 2020 a new round of fuel vehicle emission standards. By 2021, carbon dioxide emissions will not exceed 95g/km. On the basis of 2021, it will be reduced by 15% to 81 g/km by 2025. In 2030, it will drop by 37.5% to 59 g/km. By then, vehicles that do not meet the standards will face a fine of 95 Euros for every 1 g/km exceeding. At the same time, European countries are striving to increase subsidies for the purchase of new energy vehicles. Starting in 2020, Germany has increased its pure electric subsidies by 1,000-2,000 euros, while the French subsidies have increased the subsidy budget from 260 million euros per year to 400 million euros per year. The sales of new energy vehicles in Europe have grown rapidly, and their global share has increased significantly. With the gradual implementation of the policy of both rewards and punishments, the sales of new energy vehicles in Europe in 2020 will reach 1.368 million, a year-on-year increase of 152%, and the future growth is very promising.

In the United States, the Biden administration came to power, changing the Trump administration’s adherence to the development of traditional energy sources and actively embracing new energy sources. In the short term, it can be seen that Biden rejoined the Paris Agreement when he took office and decided to use the federal government's procurement system (which costs 500 billion US dollars a year) to achieve 100% clean energy and zero vehicle emissions. In addition, new stricter fuel emission standards have been formulated to ensure that 100% of newly sold light/medium vehicles are electrified. In the medium and long term, the Biden government plans to invest US$400 billion in innovative research on energy and climate in the next ten years, and will increase the construction of clean energy infrastructure. Speed ​​up the promotion of electric vehicles, deploy more than 500,000 new public charging outlets by the end of 2030, and restore full electric vehicle tax credits. It can be predicted that new energy vehicles are expected to enter the most potential market in the United States, and there is a lot to do.

Compared with fuel vehicles, electric vehicles have more copper consumption scenarios, mainly in components such as batteries, inverters, and motors. According to the data of the International Copper Research Group (ICSG), the copper consumption of pure electric vehicles is 83kg/unit, which is 60kg/unit higher than traditional fuel vehicles. The copper consumption of plug-in hybrid vehicles is 60kg/vehicle, which is 37 kg/vehicle higher than that of traditional fuel vehicles. From 2021 to 2025, the extra copper consumption of global electric vehicles compared with traditional fuel vehicles will be 246,000, 36.9, 55.4, 83.1, and 1.247 million tons, respectively.

2. Strong recovery of traditional copper demand

2.1. Consumption growth engine-China's demand enters a period of slowing down

The downstream application of copper is very extensive. Refined copper is usually first processed by semi-finished products manufacturers. These preliminary processing plants include ingot manufacturers, master alloy plants, wire rod plants, brass plants, alloy wire plants, foundries, and foil plants. Then it will be used in the consumption of various sub-terminals such as power grids, home appliances, and electronics. Copper consumption is closely related to the process of urbanization and industrialization in various regions. Therefore, the demand for copper is closely related to the global economy (especially the economies of large developing countries).

Since 2000, China has become the main driving force of global copper consumption growth. From 1.93 million tons in 2000 to 12.8 million tons in 2019, the annual growth rate is 10.5%. Domestic copper consumption has maintained a high growth rate, mainly because the domestic economy has maintained high growth, and the demand for infrastructure investment such as construction and power grids and consumer demand such as home appliances have maintained rapid growth.

The current peak period of copper consumption in China has passed. After 2015, domestic copper consumption has returned to a low growth model following GDP, and the average annual growth rate has dropped to a low of 2.5%. From the perspective of copper consumption per unit of GDP, countries such as China, the United Arab Emirates and Vietnam are relatively high, at 90, 109, and 135 tons/billion USD respectively. Countries such as the UAE and Vietnam consume relatively high copper consumption per unit of GDP, but their economies are relatively small and have limited impact on global copper consumption. Therefore, global copper consumption has entered an era of low growth.

2.2. Demand for overseas real estate and automobiles has recovered strongly

During the 2020 epidemic, industrial production in the United States, Europe, Japan and other places were strongly affected, and copper consumption was dragged down. According to ICSG statistics, refined copper consumption outside China fell by 10%. Among them, Japan fell 15%, the European Union fell 11%, and the United States fell 5%.

In the context of the large-scale fiscal stimulus adopted by the United States, most unemployed residents can obtain high unemployment benefits, and the residents' disposable income is guaranteed. Therefore, residents' consumption has been restored quickly and has returned to a higher level. In terms of production, due to poor epidemic control, community isolation and long factory shutdowns, the restoration of industrial production is slower than the recovery on the consumer side. The US economy is still in a stage where production is accelerating to catch up with demand, and the gap between supply and demand is gradually narrowing.

From a structural point of view, the real estate and auto markets in the United States and the Eurozone have shown a “V”-shaped reversal of their prosperity and maintained a trend of recovery.

After the epidemic, the real estate industry in the United States and Europe continued to maintain a strong momentum. The United States, due to monetary and fiscal policies exceeding expectations, and monetary easing, led to a sharp drop in interest rates for buying houses, and the real estate market entered a period of violent expansion. In May 2021, newly-started private housing will reach 50% year-on-year. The European residential construction output has experienced a year-on-year decline and is now back to a positive growth stage. In April 2021, it has risen to a high of 32%. In overseas developed areas, under the background of newly launched infrastructure projects and lenient fiscal budgets, the economic recovery will maintain the current trend, and monetary policies will likely continue to be loose, which will continue to have a positive effect on the real estate market.

As for the auto market, the United States and Europe had entered a recession zone before the epidemic, and their growth was weak. After the outbreak of the epidemic, auto sales in the United States and Europe were hit hard, with the largest year-on-year decline reaching -47% in the second quarter of last year. Driven by the year-on-year recovery of durable goods orders, the decline in US auto sales narrowed to the current -3%. With overall consumer demand picking up and auto electrification conversion, the auto industry is expected to quickly return to the positive growth range.

When overseas economic activities return to normal, it is expected that copper consumption will return to a positive growth track in 2021, the high growth rate will continue in 2022, and the growth rate in 2023 will drop slightly. It is estimated that from 2021 to 2023, the growth of global copper consumption excluding Mainland China will be +119 million tons (+12%), +550,000 tons (+5%) and +340,000 tons (+3%).

2.3. China's domestic traditional copper demand is stable

Traditional domestic copper consumption can be divided into two categories: one is investment copper consumption, which mainly includes four major categories: construction, power grid, railway transportation, and industry. Since this part of consumption is mainly driven by investment, it is greatly affected by policies. The other part is consumer copper consumption, which mainly includes automobiles, home appliances and electronic light industry.

Electricity and copper consumption accounted for 49%, followed by household appliances, transportation, electronics and construction, which accounted for 17%, 9%, 7% and 8% respectively.

According to relevant calculations, it is expected that the power and home appliance industries will maintain a relatively high growth rate, while delivery and construction can only maintain a weak recovery trend. Superimposed on the demand in the new energy sector, domestic copper demand is expected to increase annually by 2021-2023 by -113 thousand tons (-7.69%), +438,000 tons (+3.28%), and +309,000 tons (2.24%). (Note: In 2020, the accumulation of national purchasing and storage and inventory will lead to a substantial increase in apparent demand. In 2021, domestic demand will be deducted from the impact of purchasing, storage and inventory, so there will be a sharp decline.)

From the perspective of the construction industry, under the impact of the epidemic in 2020, the floor space of houses completed for the whole year was 910 million square meters, a year-on-year decrease of 4.9%. Affected by the low base in 2020, the completed housing area in 2021 will show a high growth rate. From the perspective of 2022-2023, the cost of land acquisition will lead the completion of construction by about 2-3 years year-on-year. In 18-19, the cost of land acquisition has begun to show a downward trend in growth. Under the background that housing is not speculation, the real estate boom will maintain the epidemic A cautious optimistic judgment after the restoration. It is expected that 2021 will show high growth under the low base benefit, and the prosperity will drop to a low level from 2022. From 2021-2023, the demand for copper will be +51,000 tons (+5%), +11 million tons (+1%) and +0 million tons (+0%).

Grid investment will usher in a small peak. As of May, the cumulative amount of grid investment during the year reached 122.5 billion yuan, 8% year-on-year. 2021 is the beginning year of the "14th Five-Year Plan". Historically, the relative growth rate was relatively high in the first two years of the Five-Year Plan, and the current coincides with the start of the UHV grid. Therefore, it is expected that grid investment will usher in a wave of small peaks. It is estimated that from 2021-2023, the annual demand for copper will be +314,000 tons (+5%), +198,000 tons (+3%) and +6.8 million tons (+1%).

The transportation industry mainly focuses on automobile production and sales. Since the cumulative automobile sales volume turned negative for the first time in 2018, the overall performance of the automobile industry has been relatively weak. During the epidemic in the first half of 2020, car sales almost stagnated. In the second half of the year, after all levels of government introduced policies such as auto subsidies and license relaxation, the monthly data of auto sales rose sharply year-on-year, and the year-on-year decline in annual sales narrowed to 1.7%. From a long-term perspective, the auto industry's active replenishment period is coming to an end, and the auto industry can only maintain a weak recovery in the next few years. It is estimated that from 2021-2023, the annual demand for copper by transportation will be +23,000 tons (+2%), +12,000 tons (+1%) and +0 million tons (+0%).

There is still room for growth in the home appliance industry. Affected by the epidemic in 2020, residents' income will be impacted, and the sales of air conditioners will be greatly affected due to the inability to install on-site installations during the epidemic. The annual sales of household air conditioners were 141.5 million units, -6% year-on-year. Production has also been dragged down. In 2020, the annual output of air conditioners will be 210.6 million units, -3.7% year-on-year. However, from the perspective of the big cycle, there is still a gap between Japan and Taiwan, where the per capita air-conditioning capacity of residents in mainland China is similar to their living habits. growth trend. It is estimated that from 2021 to 2023, the demand for copper in the air-conditioning-based home appliance industry will be +131 thousand tons (+6%), +92,000 tons (+4%) and +96,000 tons (+4%) respectively.

3. Copper mine supply-substantial increase

3.1. South American copper mine output is back on track

In the first half of 2020, major overseas copper mine suppliers were affected by the epidemic, many countries entered a state of emergency, and mine production and transportation suffered huge disruptions. Chile and Peru are the world's important copper mines. The total output of copper mines in the two countries accounts for about 40% of the total output of copper mines in the region. During the 2020 epidemic, the output of the two countries was greatly affected. Peru's output was greatly affected. In 2020, the output of copper ore was 2.15 million tons, a year-on-year decrease of 12%. From a timeline perspective, the largest decline in output in the second quarter reached 21%, and then the decline gradually narrowed, mainly due to the gradual improvement of the epidemic situation and the recovery of copper mine project output.

The output of copper mines in Chile is relatively small due to the epidemic. The annual output of copper mines was 5.73 million metal tons, about -1% year-on-year. The major copper mines in Chile and Peru that suffered negatively during the epidemic were the Escondida and Chuquicamata mines in Chile and the Antamina, Cerro Verde and Las Bambas copper mines in Peru. After entering 2021, Chile is still suffering from the epidemic, and its output still maintains a certain decline. The cumulative output from January to April is 1.834 million metal tons, a cumulative -2% year-on-year.

With the increase in vaccination rates in the later period and the effectiveness of epidemic control, the output of major copper-producing countries in South America is expected to be restored.

3.2. Expansion of production and concentration of new projects, copper mine supply has entered a prosperous period

3.2.1. In the post-epidemic era, new production capacity is rising

The resumption of production, expansion and new production resonate, and mine-side supply has entered a prosperous period: 2021-2023 copper mine supply will enter a prosperous period, mainly from three aspects of increase. First, the epidemic caused most mines to adopt quarantine measures and passively reduce production in 2020. In 2021, this part of the output loss will be repaired as the epidemic improves. Second, during the 2020 epidemic, the expansion project that was supposed to be put into operation in 2020 was postponed to after 2021. Third, as the current copper price is relatively high and the profit margin of the mine is relatively large, the commissioning of new projects has accelerated. The estimated annual increase in global copper mine supply from 2021 to 2023 is 1.6 million tons, 750,000 tons and 750,000 tons, respectively.

The first part is the increase in resumption of production from the epidemic. It is mainly mentioned that in 2021, most of the world's copper mining companies will be affected by the epidemic in 2020, and their output will decline throughout the year. The impact of the epidemic on copper mining is mainly reflected in mines in South America, Chile and Peru. At the same time, there are a few mines in the United States and Mexico that have received varying degrees of negative impact. The copper mines in Chile that have been affected by the epidemic and have led to a decline in output include Chuquicamata, a subsidiary of Chile National Copper, and Los Bronces, a subsidiary of Anglo American. The copper mines in Peru affected by the epidemic are mainly Antamina, Cerro Verde, and Las Bambas mines. In addition, the Buenavista mine in Mexico has experienced a decline in output due to the epidemic. It is expected that these companies that have experienced a decline in production due to the epidemic will have a total repair output of 300,000 tons in 2021.

The second part is the increase caused by the postponement of the expansion project. First Quantum's Cobre panama project in Panama was put into production in 2019, and the epidemic has a direct negative impact on the project's production climbing. The mine will be protected and safely maintained from April 7, 2020 until August 8, 2020. Operations resumed successfully and the interim suspension reached 4 months. Cobre Panama, the copper mine has returned to normal at present, and will continue to ramp up production in 2021. It is estimated that the copper mine output will reach 310,000 tons in 2021 and will further climb to 360,000 tons in 2023. In addition, the expansion of some original projects will continue to contribute significantly in the following years, including Freeport's Grasberg project in Indonesia, Rio Tinto's Oyu Tolgoi in Mongolia, and the Chuquicamata project under Chile's National Copper Corporation. This part of the supply increase will be 620,000 tons, 230,000 tons and 250,000 tons in 2021-2023, respectively.

The third part is the commissioning of new projects. In 2021, there are many new projects that will land in Africa and South America, such as Ivanhoe’s Kamoa-Kakula project in the Democratic Republic of Congo, Anglo American’s Quellaveco project in Peru, and Tektronix’s project in Chile. Quebrada Blanca (2) is the main project. The production project will land in 2021 and enter the production climbing period. This part of the supply increase will be 220,000 tons, 530,000 tons and 500,000 tons in 2021-2023, respectively.

BHP Billiton: In 2020, the copper mine equity output will reach 654,000 tons. The second phase expansion project of the Spence copper mine in Chile has been put into operation at the end of 2020 and is currently in the climbing stage. It is expected to reach full production of 200,000 tons of copper mine by the end of 2021. The Olympic dam project located in Australia carried out the physical replacement and commissioning of the fuel oil crane in 2021, which affected the production loss of about 30,000 tons. From 2022, the production will be restored to 220,000 tons per year.

Freeport: In 2020, the annual copper mine equity output will reach 979,000 tons, and in 2021, it will enter a period of rapid growth. Subsidiary PT Freeport Indonesia (PT-FI for short) will have a larger output increase, mainly due to the increase in production after the Grasberg mine is converted from above ground to underground mining. PT-FI's annual capital expenditure on the Grasberg underground mine development project is expected to reach an average annual level of US$900 million between 2021 and 2022. The Grasberg mine's copper mine output will reach 635,000 tons in 2021, which is nearly double the same as in 2020, and is expected to reach 800,000 tons by 2023.

Glencore: Due to the impact of the epidemic, the planned maintenance work has been delayed, and the output in 2020 will be affected to a certain extent. It will operate on a single line for most of 2020. Due to Covid-19 in March 2020, one of the furnaces was undergoing regular maintenance, and its restart was postponed to October. The second furnace was demolished in January 2021 for maintenance and is expected to restart in April 2021.

First Quantum: During 2020, First Quantum's equity copper mine output reached 670,000 tons, an increase of 10% year-on-year. This is mainly due to the increase in output from the Cobre panama and Sentinel mines. Among them, the production capacity of Cobre panama has been increasing year by year after it was put into operation in 2019. In 2020, the mine’s epidemic situation was well controlled, and the output of copper ore was 208,000 tons, an increase of 160% year-on-year. The subsequent production capacity will further climb and is expected to reach 360,000 by 2023. Ton. The increase in the output of Sentinel mine is mainly due to the reduction of carbon and pyrite content during the beneficiation stage, which increases the grade of copper ore, and can only maintain a small increase in the following years.

Anglo American Resources: In 2020, the output of equity copper mines will be 620,000 tons. Currently, the construction of the Quellaveco mine in Peru is stepped up, and Anglo American Resources holds 60% of the mine. It is expected to be officially put into operation in 2022 and will reach an annual output of 300,000 tons of copper ore after full production.

Rio Tinto: The output of the equity copper mine in 2020 will be 528,000 tons, which is expected to increase rapidly in the future, mainly due to the expansion of the Oyu tolgoi mine. Located in Mongolia’s Oyu tolgoi mine, the total investment in the underground project will reach 6.75 billion U.S. dollars and will be put into operation in October 2022. By 2030, the entire Oyu tolgoi project will reach an annual output of 480,000 tons, making it the fourth largest mine in the world.

Tektronix Resources: In 2020, the copper mine's equity output will be 260,000 tons. The company announced in June 2021 that it will double the output in 2023, mainly due to the commissioning of the new project Quebrada Blanca Phase 2. The project has completed 40% of the construction in 2020 and is expected to be put into operation in the second half of 2021. The Quebrada Blanca Phase 2 project is expected to reach 290,000 tons by 2023.

Chile Southern Copper: In 2020, the equity output of copper mines will be 910,000 tons. The Pilares project will start production in the first quarter of 2022. The annual production capacity is 35,000 tons of copper concentrate.

China Minmetals: In 2020, its Las Bambas copper mine in Peru only produced 310,000 tons of copper due to employees infected with the new crown virus, which was a 19% drop from 2019. The Las Bambas copper mine will enter the restoration period in 2021 and is expected to reach 400,000 tons of output from 2022. The output of Minmetals' equity copper mine in 2020 will be 310,000 tons, and it is expected to resume to 380,000 tons by 2021, and will increase with the further increase in the output of Las Bambas copper mine.

Zijin Mining: The output of the equity copper mine in 2020 will be 330,000 tons. Starting in 2021, new projects will be put into production more concentratedly, mainly the Kamoa-Kakula project in the Democratic Republic of Congo, the Timok project in Serbia and the Qulong Copper Mine in Tibet. Three major projects will also enter a concentrated production climbing period. The largest production capacity is the Kamoa-Kakula project in the Democratic Republic of Congo, which is expected to reach an annual output of 300,000 tons of copper ore by 2023, and will further increase to 400,000 tons of copper ore by 2025 .

3.2.2. The small peak of production is due to the high capital expenditure of the previous round of business cycle

From a long-term perspective, copper prices and copper mine capital expenditures have a certain connection, and they are mainly positively correlated. The rise in copper prices will bring income to mining companies. On the one hand, mining companies will have more sufficient investment capital. On the other hand, high profits will also stimulate mining companies to conduct more exploration and mining projects.

The price of copper is closely related to the trend of capital expenditures of copper mining enterprises, and the gap between the basic inflection points has remained within one year. From 2016 to 2017, copper prices were at the trough of the previous cycle, which also led to a period of contraction in capital expenditures of mining companies. After 2017, copper prices gradually recovered, which also led to a gradual increase in copper mine capital expenditures. The development cycle of copper mines is generally longer, generally within 3-5 years. If there is no impact from the epidemic in 2020, new copper mines and expansion projects will also begin to enter a production capacity release period. Due to the impact of the epidemic, these projects have generally been postponed. Therefore, 2021-2023 is a small peak period for global copper mine production capacity growth.

3.2.3. In the post-epidemic era, the supply of copper scrap will resume

The policy restricts the import of waste, and the impact of the epidemic has been superimposed, and the use of domestic copper scrap has fallen. Against the backdrop of a global low-carbon economy, the use of scrap copper has been increasing year by year. It can be expected that the global supply of scrap copper will continue to show an upward trend in the future, and the increase will mainly come from the two major economies of the European Union and the United States.

China is a large copper scrap consumer, accounting for 20-30% of the global copper scrap usage all year round. Domestic copper scrap is more dependent on imports, while domestic copper scrap imports adopt a quota system. Entering 2020, domestic import approvals have greatly increased the quality requirements for scrap copper, and the impact of overseas epidemics has been superimposed, and overall imports have shown a downward trend. It is expected that as the impact of the epidemic subsides and Malaysia's role as a transit point for overseas copper scrap flowing into the country strengthens, the import and use of domestic copper scrap will further increase.

From a global perspective, industrial production activities will undoubtedly recover significantly, leading to an increase in the supply of scrap copper. With the large-scale application of vaccines in developed economies, the recovery of industrial activities will become normal, and the use of scrap copper will return to the level before the epidemic, and it will enter a normal climbing stage. It is expected that the global use of copper scrap will enter the normal restoration period in the next few years.