Copper production to grow 3% annually until 2029 globally

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Global copper mine production will see steady growth over the next few years, as a number of new projects and expansions come online, supported by rising copper prices and demand, Fitch Solutions forecasts in a new report.

Fitch analysts predict global copper mine production to increase by an average annual rate of 3.1% over 2020-2029, with total output rising from 20.3 to 26.8 million tonnes over the same period.

The ratings agency research arm suggested technology and productivity advances could effectively combat long-term cost increases from declining average grades, and higher material movement requirements, to maintain output rates at some mines.

New projects in Australia and the Americas (and, potentially, Africa) could lift mine supply from 20.3 million tonnes in 2020 to 26.8Mt by the end of the decade, Fitch said.

In 2020, Fitch forecasts Chile to increase production modestly by 0.5% to 5.89 million tonnes. Growth will be led by the ramp-up of BHP’s Spence Growth Option over H2 2020, increasing production at Lundin Mining’s Candelaria mine and a rebound in production from mines hampered by heavy rains in the beginning of 2019. Fitch says these developments will outweigh the declines in production from Antofagasta’s Centinela operation due to lower ore grades and from Teck Resources’ Quebrada Blanca.

Downside risks to production will stem from declining ore grades across the country, unfavourable climate, protests that hamper supply chain operations and union strikes, analysts predict.

Fitch forecasts Chinese copper mine production to increase at an average clip of 1.8% per year over 2019-2028, compared with an average growth rate of 6.9% over the past 10-year period. This slowdown in production growth will be driven by closures of low-grade copper mines in China and delayed planned capacity expansions.

Growth in domestic production will still be positive as new projects come online. A weaker Chinese yuan against the US dollar will help reduce costs for domestic Chinese mines, says Fitch. China, being the world’s largest consumer of refined copper and third-largest producer of mined copper, will look to develop foreign assets to improve its resource security.

Chinese copper miners will remain committed to investing in copper deposits abroad to secure access to high-grade, low-cost material. For instance, in October 2019, Zijin Mining announced that it would spend $146 million to increase its interest in Ivanhoe Mining. The purchase will make Zijin the second-largest shareholder in the company developing the Kamoa-Kakula copper mine in the Democratic Republic of Congo (DRC).

As for the DRC, Fitch revised the 2020 outlook from 8% growth to a 15% contraction after Glencore put the Mutanda mine, which produced nearly 200,000t of copper and 27,000t of cobalt per annum, on care and maintenance in November.

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