As the global transition to clean energy accelerates, the demand for copper continues to rise, but the growth on the supply side is struggling to keep up. Last week, copper prices recorded their largest weekly increase in four months, climbing by 6% and breaking through the $10,000 per ton mark. Analysts believe that the stimulus measures announced by China last week were the main driver behind this surge, which is expected to significantly boost demand in the world's largest copper consumer—China. However, some industry insiders argue that even if copper prices rise, it may not be enough to stimulate investment in large-scale copper mining projects.
Last week, at the Financial Times Mining Summit in the UK, the CEO of Chilean copper producer Antofagasta, Iván Arriagada, stated that government policies have been slow in granting mining permits, leading to a severe imbalance between copper supply and demand. Arriagada indicated that copper, a metal widely used in power grids, electrical wires, and electric vehicles, is expected to face a shortage, which means that price fluctuations will be "occasionally violent."
Arriagada stated that over the next decade, the world will need to increase copper production equivalent to the entire output of Chile, otherwise, the energy transition will face the risk of "delay": "The copper market has traditionally been very sensitive to short-term or macro factors." Last week, China announced stimulus measures, and some analysts predict that this will boost global demand for copper consumption."Volatility will be a persistent feature," said Nicholas Snowdon, head of metals and mining research at trading company Mercuria, "It will be a seesaw."
Copper prices soar, sparking supply concerns and calls for increased investment in mining
Driven by tight supply and demand for renewable energy, in May, global copper prices once broke through $11,100/ton, reaching a historical high. Although they have since retreated, market concerns about copper supply shortages persist.
Jonathan Price, CEO of Canadian copper giant Teck Resources, said that China's recent stimulus policies are expected to boost copper demand.
However, he also pointed out that even rising copper prices may not be enough to attract sufficient investment. This is because the development cycle for new mines is usually long:
"Even if copper prices rise, it may not be enough to incentivize the construction of some of the large projects that the world will need. Because the establishment of new metal mines usually takes several years, sometimes even more than a decade."
This has raised concerns about shortages of metal supplies, including copper and lithium, which are used in key production areas such as infrastructure and automotive batteries.
Duncan Wanblad, CEO of Anglo American, said the world "almost unanimously agrees that copper is important." For companies that are restructuring their businesses, "in the short term, copper must be a top priority."
Peter Toth, Chief Development Officer at gold mining company Newmont, also called on the industry to increase investment in copper mines, stating: "At both the industry and societal levels, someone must build more copper mines."