The world will need more than 10 million tons of copper to meet demand

       According to CRU Group's estimates, as the clean energy and transportation industries take off, the copper industry will need to spend more than US$100 billion to fill the 4.7 million tons/ton supply gap that may be reached by 2030.

　　The Trafigura Group, a commodity trader, said that if there is no new copper mine, the potential supply gap of copper may reach 10 million tons. To close this gap, eight new Escondida copper mines are needed .

       Copper is widely used in fields ranging from wires and pipes to batteries and motors. It is not only an economic indicator, but also a key element to promote the development of renewable energy and electric vehicles. If producers cannot solve the supply shortage, copper prices will continue to rise, leading to challenges in the global energy transition to cope with climate change.

　　Rising copper prices may lead to more recycling and replacement with cheaper alternatives such as aluminum, thereby alleviating shortages.

　　To be sure, some copper projects are currently under preparation. Miners are speeding up plans to avoid repeating the false guarantees of oversupply in the past cycle. However, the construction of copper mines is getting more and more difficult, and the price of copper is getting higher and higher. This is one of the reasons why the price of copper is close to a 10-year high, which is higher than $4 per pound.

　　Bloomberg Intelligence (BI) analysts Grant Spree and Andrew Cosgrove wrote in a report this week: Increased technical complexity and delays in approvals may result in a lack of new projects in production during 2025-30.

　　BI analysts said that new projects are currently being developed that may alleviate the copper supply gap between 2022 and 2025. If the copper price stays at a higher price for a longer period of time, it should make some higher-cost projects more profitable; the expansion of the output of existing copper mines is usually simpler than the approval process for new copper mines. However, the execution risk is still considerable, especially during the period 2022-23.

　　This year all eyes are on Indonesia, where Freeport-McMoran is developing an underground mine in Grasberg. The construction speed is slower than expected. It is expected to be completed by the end of this year, thus alleviating the problem. The pandemic has interrupted global supply shortages.

　　Ivanhoe Mines Co., Ltd. stated that the Kamoa-Kakura project in the Democratic Republic of Congo is scheduled to start production in July.

　　As long as community relations do not deteriorate, Anglo American’s Quellaveco project in Peru may start production next year.

　　The ability of producers to meet growing demand will also depend on Southern Copper, which hopes to almost double production by 2028.

　　A large part of the new supply in the next ten years may come from Pakistan's Reko Diq copper mine. At that time, the local political situation and laws were highly uncertain. The Tampakan project in the Philippines is also full of uncertainty.

　　Nowadays, in view of the increase in social and environmental awareness and expectations, the company has to contact the community and the government earlier in terms of project development. Part of the reason is that, according to BI data, the average lead time from the first copper discovery to the first mining of copper is nearly 14 years, which is 4 years longer than the previous cycle.

　　BI analysts said that it is ironic that the increased concern of mining activities on the environment prevents the mining industry from quickly meeting the market gap with new supplies, even though the price is much higher than the incentive price.

　　For the top executives of the world's top copper producers, it is impossible not to understand the subtleties. Freeport CEO Richard Adkeson said at an industry conference last week that even if copper prices soar to $10 per pound tomorrow, it will take his company seven or eight years to supply the newly increased copper production to the market. .

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Introduction to Escondida Copper Mine

The Escondida deposit is one of a cluster of porphyry coppers in an elongated area about 18 km north-south and 3 km east-west and is associated with the 600 km long West Fissure (Falla Oeste) system, which is in turn associated with most of the major Chilean porphyry deposits. A barren, leached cap, in places up to 300 metres thick, overlies a thick zone of high grade secondary supergene mineralisation of the main orebody, largely chalcocite and covellite, which in turn overlies the unaltered primary mineralisation of chalcopyrite, bornite and pyrite.

At mid 2007, Escondida had total proven and probable reserves of 34.7 million tonnes of copper, of which 22.5 million tonnes is estimated to be recoverable. Total resources (including reserves) were 57.6 million tonnes of copper, of which 33.0 million tonnes should be recovered . Exploration continues.

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