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Bank of America (BofA) global research analysts said in a new report that the copper market is expected to return to deficits
from 2025 with the completion of the current wave of project construction.
The bank said that while global copper production is expected to grow by 7.
7% in 2023 despite a projected deficit in 2022, risks are skewed to the downside
given the poor performance of new copper mines in recent years.
"While visibility into the near-term project pipeline is good, the increase in activity has been accompanied by shocks," the bank's analysts said, "In fact, many of the projects currently under development have been in the making for almost 30 years, and supply growth may fade from 2025 due to relatively limited exploration activity in recent years
.
"
Bank of America sees a series of problems
limiting production growth.
During the recent LME week, Edgar Blanco Rand, former Chile's government's deputy minister of mining, gave a speech that reflected these circumstances
.
The official presented a series of Chilean-based projects that will be realized by 2029 at a cost of $74 billion to achieve a total production
of 7 million tons.
Edgar Blanco focuses on copper, highlighting that production has been flat since 2000 at around 5.
7 million tonnes
.
"This implies a capital expenditure intensity of around $50,000 per tonne, well above the $10,000 to $20,000 per tonne range
in recent years.
" As an aggravating factor, the investment needs to be large enough to offset the loss
of production of about 1.
5 million tonnes.
”
According to Bank of America, the 10 most significant supply increases will account for 58%
of total output increases by 2022.
This supports Bank of America's view that expansion is very concentrated and has two implications
.
First, operational issues with just one or two mines can seriously affect market balance, which means that the trajectory of these 10 mines is critical
.
Second, according to Bank of America, nearly all of the new business is driven by operators with excellent operating records, reducing the risk of
disruptions and underdelivery.
Bank of America (BofA) global research analysts said in a new report that the copper market is expected to return to deficits
from 2025 with the completion of the current wave of project construction.
The bank said that while global copper production is expected to grow by 7.
7% in 2023 despite a projected deficit in 2022, risks are skewed to the downside
given the poor performance of new copper mines in recent years.
"While visibility into the near-term project pipeline is good, the increase in activity has been accompanied by shocks," the bank's analysts said, "In fact, many of the projects currently under development have been in the making for almost 30 years, and supply growth may fade from 2025 due to relatively limited exploration activity in recent years
.
"
Bank of America sees a series of problems
limiting production growth.
During the recent LME week, Edgar Blanco Rand, former Chile's government's deputy minister of mining, gave a speech that reflected these circumstances
.
The official presented a series of Chilean-based projects that will be realized by 2029 at a cost of $74 billion to achieve a total production
of 7 million tons.
Edgar Blanco focuses on copper, highlighting that production has been flat since 2000 at around 5.
7 million tonnes
.
"This implies a capital expenditure intensity of around $50,000 per tonne, well above the $10,000 to $20,000 per tonne range
in recent years.
" As an aggravating factor, the investment needs to be large enough to offset the loss
of production of about 1.
5 million tonnes.
”
According to Bank of America, the 10 most significant supply increases will account for 58%
of total output increases by 2022.
This supports Bank of America's view that expansion is very concentrated and has two implications
.
First, operational issues with just one or two mines can seriously affect market balance, which means that the trajectory of these 10 mines is critical
.
Second, according to Bank of America, nearly all of the new business is driven by operators with excellent operating records, reducing the risk of
disruptions and underdelivery.
