The copper industry needs to invest $100 billion by 2030 to close an annual supply deficit of 4.7 million tons as clean power and transport sectors boom.
Estimates from CRU Group and Trafigura Group further estimate that the deficit could grow to 10 million tons if no mines are built in the next 10 years.
The world would need 8 mines equal in size to BHP Group’s Escondida location in Chile, the world’s largest copper mine, to close the demand deficit.
Pressure is also mounting on copper producers from political parties, as the Biden administration continually relies on the advancement of renewable technology as part of its core platform. Price hikes for materials essential to the production of renewable energy sources could spell doom for their recent breakout into the market.
Fortunately, producers already have plans for new mines in the works. Many are keenly watching Indonesia’s underground mine at Grasberg, where construction is set to be completed by the end of 2021. Other ongoing projects include the Quellaveco project in Peru and the Reko Diq deposit in Pakistan.
Producers are cautious to aggressively ramp-up production out of fear of over-supply should market sentiment shift. The production of mines has gotten more complex and even more expensive according to most of the industry leaders, slowing down how quickly new supply can enter the market.
Freeport, one of the world’s largest producers of copper, told the press that even if the price of copper skyrocketed to $10 a pound, it would take them 7 to 8 years to bring new supply into the market.
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