Copper supply gap to emerge in second half of the decade, new report says

After hitting a new record of US$4.88 per lb. on May 10, LME cash copper prices are expected to average US$4.20 per lb. in 2021 and US$3.96 per lb. in 2022, according to the inaugural edition of Critical Metals for a Sustainable World, a new monthly publication by Capitalight Research.

The Toronto-based research group notes that “trend copper prices must remain well above long-term ‘incentive levels’ to justify new mine development,” or at around US$3.50 per pound.

The report notes that world demand for copper will grow by 3.8% in 2022 to about 25 million tonnes. And while supply of the red metal over the next few years will be bolstered by new copper mines coming on stream such as Ivanhoe’s Kamoa-Kakula in the Democratic Republic of Congo, Mina Justa in Peru and Timok in Serbia, along with new projects under development such as Teck Resources’ Quebrada Blanca Phase 2, it expects that “the current mine expansion wave will peak in 2024 and a large projected gap in required mine supply will open up in the second half of the decade.”

The report also points out that demand for copper “from renewable power projects, energy storage and electric vehicles could double by 2025 to 8.5 million tonnes,” and notes that “unlike recent years, prices will be driven less by short-term macro-economic developments in China and more by rising demand linked to global decarbonization.”