Copper Demand Soars with Green Energy Revolution: Data Predict Five-Fold Increase by 2030

Market Projection
Leading Copper-Producing Companies
Codelco
BHP
Glencore
Freeport-McMoRan
Anglo American
Related Market Research Reports

Copper is known as Dr. Copper because of its ability to serve as a barometer for the overall health of the global economy. Due to its widespread use in many industries, including construction, transportation, and electronics, the demand for copper is often tied to economic growth and industrial production. Therefore, changes in copper prices and demand can reflect broader economic trends, making it a useful indicator for investors and analysts. This is why it has earned the nickname "Dr. Copper," as it is seen as having the ability to diagnose and predict changes in the global economy.

1 . Market Projection

It is a highly valued base metal due to its high ductility and electrical conductivity, making it the third most consumed industrial metal in the world, behind iron ore and aluminum. Copper is widely used in power transmission and generation and is a crucial component in the electric vehicle revolution. Experts predict that copper consumption will increase five-fold by 2030 due to demand from the green energy market.

The supply of copper is prone to disruptions caused by various factors, including environmental events, worker strikes, economic fluctuations, and global events such as the COVID-19 pandemic. It is essential to monitor major copper-producing countries such as Chile, Peru, and China to understand supply and demand dynamics. Some experts have concerns about copper output, predicting that prices for the red metal will remain high in the future as supply struggles to keep up with demand.

Substantial new mine supply development will be required to meet this demand, and higher copper prices will be needed to support this new supply. While historically, copper prices have been correlated to input costs such as energy and other commodity-related consumables, during 2022, copper prices declined while prices for these consumables increased. While some costs have since decreased from their highs, most remain high relative to long-term correlations. Additionally, labor constraints, particularly in the U.S., have limited production levels.

In 2021 and 2022, copper reached all-time highs above US$10,700 and US$11,067 per metric ton, respectively, due to higher demand expectations from electric vehicles and renewable energy applications. Russia's war in Ukraine has also impacted both demand and supply, as Russia is one of the top copper-producing countries. The balancing act of supply and demand is fragile, and investors interested in copper may want to consider investing sooner rather than later.

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2 . Leading Copper-Producing Companies

The copper market is dominated by a small number of leading copper-producing companies, who collectively control a significant portion of the global copper supply. The top copper-producing companies in the world include Codelco, Freeport-McMoRan, Glencore, BHP Group, and Anglo American.

3 . Codelco

According to Chairman Maximo Pacheco, Chile's Codelco, the world's largest copper producer, reported a 10% drop in copper output in 2022. The company produced 172,000 fewer tonnes of copper, with 77% of the reduction caused by operational issues and 23% due to project delays. The company suffered several high-profile accidents resulting in fatalities, leading to the suspension of operations. The El Teniente mine's investment plan was 75% over budget, while the Traspaso Andina project was 21% over budget. The Rajo Inca project is also 16 months behind schedule, with production expected to start in H1 2024.

Operational and Project Delays

Codelco's Chairman Maximo Pacheco spoke at an association of engineers in Santiago, where he explained that the reduction in copper output was due to operational issues and project delays. He noted that the Chuquicamata mine collapsed, and a landslide occurred at its Ministro Hales mine. These events contributed to the reduction in copper output. Pacheco also said that the company was working to improve safety, although he did not provide further details.

Budget Overruns

Pacheco also revealed that the El Teniente mine's investment plan was $5.6 billion, which was 75% over budget compared to initial estimates. The Traspaso Andina project was also 21% over budget, reaching $1.7 billion. Codelco is revising the $1.4 billion Rajo Inca project, which is 16 months behind schedule, and production is expected to begin in H1 2024.

4 . BHP

BHP is a leading global resources company that specializes in the exploration, development, and production of commodities such as copper, iron ore, coal, and petroleum. Founded in 1885, the company operates in more than 90 locations across the world and employs over 80,000 people.

BHP reported that its copper production had increased by 12% to 834 kt in the December 2022 half year compared to the same period in the previous year. This growth was mainly driven by the 5% increase in copper production at its Escondida mine, which produced 511 kt of copper in the December 2022 half year. The higher production at Escondida was primarily due to the higher concentrator feed grade of 0.79% compared to 0.72% in the December 2021 half year.

Despite the increase in copper production, BHP has maintained its copper production guidance for the 2023 financial year, which remains unchanged at between 1,635 and 1,825 kt. This indicates that the company expects production to remain stable for the coming year. Overall, BHP remains a major player in the global resources industry and is committed to sustainable development and responsible mining practices.

5 . Glencore

Glencore, a leading mining and commodities trading company, has reported a 12% decline in its copper production to 1.1 million metric tons in the past year. This is lower than the company's original guidance of 1.1 million metric tons, with a deviation of 20,000 tons.

Glencore's copper production has been impacted by a range of factors, including disruptions caused by the COVID-19 pandemic and operational challenges at some of its mining facilities. The company has been taking steps to address these issues and improve its performance, including investing in new technology and exploring new mining opportunities.

Glencore has set a copper production target of 1.0 million metric tons for 2023, with a deviation of 30,000 tons. The company is focused on improving its operations and continuing to innovate in order to meet this goal and maintain its position as a leading player in the global mining industry.

6 . Freeport-McMoRan

Freeport-McMoRan is a leading global mining company that produces copper, gold, and molybdenum. The company operates large, long-lived, geographically diverse assets with significant proven and probable reserves of copper, gold, and molybdenum.

Freeport-McMoRan's copper production is primarily located in North and South America, with mines in the United States, Peru, and Chile. The company also has copper operations in Indonesia and Africa. Freeport-McMoRan's copper production is focused on open-pit mining, where large quantities of copper-bearing rock are extracted from the earth's surface.
The company uses a variety of mining methods, including conventional shovel and truck, drill and blast, and in-pit crushing to extract copper ore from its mines. Once extracted, the copper ore is processed using a variety of techniques, including smelting, refining, and leaching, to produce high-quality copper concentrate.

In Q4 2022, FCX recorded consolidated copper sales volumes of 317 million pounds from South America, which is an increase compared to the 286 million pounds sold in Q4 2021. This growth can be attributed to the higher leach placements at El Abra and increased mining and milling rates at Cerro Verde. Looking ahead, the company anticipates copper sales from South America mining to be around 1.2 billion pounds throughout the year 2023.

In Q4 2022, FCX's consolidated copper sales volumes from North America amounted to 338 million pounds, which is a decrease from the 364 million pounds sold in Q4 2021. The decline is mainly due to lower mill ore grades and the timing of shipments. Looking forward, the company expects North America copper sales to be approximately 1.5 billion pounds for the entire year of 2023.

7 . Anglo American

Anglo American, a global mining group, has reported an increase in its total copper production to 664,500 tonnes, a rise of 3% compared to the previous year's 647,200 tonnes. This increase was mainly due to the first copper concentrate production from their newly commissioned Quellaveco copper mine in Peru. Even though copper production in Chile was lower due to planned lower grades at Los Bronces and Collahuasi, the increase from Quellaveco more than offset it.

The Quellaveco copper operation in Peru is an important part of Anglo-American's growth strategy. It increases the company's global production base by 10% and is expected to contribute to their goal of achieving a 25% growth in value over the next decade. In addition to copper, the company also has the potential to expand into crop nutrients in the future. Anglo American has a strong track record of responsible mining practices and is committed to sustainable development, community engagement, and environmental stewardship.