Insights on global copper trends and challenges

By Peter Milios | More Articles by Peter Milios

The International Copper Study Group (ICSG), headquartered in Lisbon, Portugal, has updated its projections on the global balance of refined copper production and consumption, shedding light on critical trends and challenges shaping the industry's landscape.

Production Trends:

The ICSG forecasts a modest 0.5 percent increase in mine production for 2024, followed by a 3.9 percent rise in 2025. However, these figures are slightly lower than previous estimates, attributed to delays in project ramp-up, commissioning, and closures, such as First Quantum's Cobre Panama mine. Notably, new projects like the Malmyzhskoye mine in Russia and the Kammoa-Kakula Phase 3 expansion in the Democratic Republic of Congo are expected to bolster global output in 2025.

Refined copper production is anticipated to grow by 2.8 percent in 2024 and 2.2 percent in 2025, rebounding from maintenance outages and operational issues in 2023. Despite increased Chinese capacity and the emergence of new smelters in Indonesia and India, primary electrolytic refined production growth may be constrained due to concentrate availability.

Demand Outlook:

Apparent refined copper use is projected to rise by 2 percent in 2024 and 2.5 percent in 2025, with significant contributions expected from India and other countries. Despite a surplus forecast for 2024 and 2025, copper remains indispensable for economic activity, infrastructure development, and the global transition towards cleaner energy and electric vehicles.

Market Dynamics:

Analysts at Citigroup have declared a bull market for copper, supported by consistent futures contract performance surpassing spot prices since 2023. The soaring demand for copper underscores its vital role in various sectors, including housing, manufacturing, energy infrastructure, and renewable technologies like electric vehicles, solar panels, and wind turbines. Even emerging technologies such as AI data centers rely on copper for power and wiring.

However, concerns persist regarding the supply-demand imbalance. The recent acquisition of Anglo American's mining sites highlights the challenge of addressing the global copper supply shortage. Acquiring existing assets appears more expedient than developing new mines, raising alarms about meeting escalating global demand, particularly in the context of green technology transitions.

Challenges and Solutions:

Forecasts by S&P Global suggest that copper demand could double by 2035, potentially leading to supply shortfalls, even under optimistic scenarios. The pipeline for new copper projects is thin, with exploration budgets shrinking since the early 2010s. Additionally, copper mining is capital-intensive, requiring substantial investments and facing lengthy timelines from discovery to production.

To address these challenges, governments must streamline permitting processes, support skills development, and foster diplomatic relations with copper-producing nations. Mining companies play a pivotal role in promoting responsible mining practices, enhancing oversight, and investing in local economies. Encouraging copper recycling and waste reduction can also alleviate supply constraints.

About Peter Milios

Peter Milios is a recent graduate from the University of Technology - majoring in Finance and Accounting. Peter is currently working under equity research analyst Di Brookman for Corporate Connect Research.

View more articles by Peter Milios →