Global important copper producers may reduce production by 40%, causing copper prices to soar again?

On May 24th, foreign media reported that nearly 40% of the copper production of Chile's national copper company Codelco, an important global copper producer, will face the risk of production stoppage. At present, the Chilean Congress is considering a glacier protection bill, and the three main mines of Codelco, Andina, El Teniente, and Salvador, are all restricted by the glacier protection bill. The combined copper production of these three mines accounts for nearly 40% of Codelco's total production.

Mining has always been in a very conservative environment. In early 2010, the mining industry made significant investments in copper mining projects, but as a result, copper prices quickly collapsed and any producers who invested heavily in new projects were punished. This has also resulted in no significant increase in investment in copper mining projects, even at the current record high copper prices.

At present, the number of copper projects is very limited, and no new large-scale copper projects have been put into operation in the past 12-18 months. The quality of current projects is' very poor 'compared to 10 years ago, with higher costs. Copper prices need to further rise in order to have the motivation to invest in more projects.

Meanwhile, the unions of Escondid, a globally important copper mine under BHP Billiton located in Chile, and Spence, another copper mine, have both rejected the company's proposed salary contracts, and the threat of strikes is continuing to rise. The overseas epidemic has been fluctuating, and the global copper supply is facing increasing uncertainty.

Recently, Goldman Sachs released a report claiming that copper is the "new oil" and predicting that as the world shifts towards clean energy, copper prices may reach $15000 by 2025.

Before the outbreak of the epidemic, a certain institution expected that the production capacity of large mines with a capacity of over 100000 tons that may be put into operation from 2020 to 2023 would increase by about 1.9 million tons per year, and the overall expansion of the mine is likely to exceed 2 million tons. But with the outbreak of the epidemic, many projects had to be postponed.

The Chilean National Copper Commission announced that the MineJusta project, which was supposed to start production by the end of 2020, will be "delayed for a few months" and the start date will be postponed to 2021; BHP Billiton also announced that its Spence copper mine expansion project in Chile was temporarily postponed to 2021 due to the reduction of staff due to the COVID-19; Tech Resources announced the restart of the Quebrada Blanca Phase II project, but the production time has been postponed from the second half of 2021 to 2022; The mining strikes in Cetniela and Michiquillay are pending, and the expansion plans are expected to be postponed for one year each.

The Kamoa KaKula copper mine is relatively smooth, and Canadian mining company Ivanhoe Mines is expected to officially start production in the third quarter of 2021. The first phase is designed to process 6 million tons of ore annually, with an annual output of over 300000 tons of copper and an average grade of over 6% for early processing.

The Qulong Copper Mine, a subsidiary of Julong Copper Industry, is an important copper mine in China. According to the plan, the first phase of the Qulong Copper Mine area is scheduled to be completed and put into operation by the end of 2021, with an annual output of 165000 tons of copper and 6200 tons of molybdenum after completion. The second phase will start construction at a rate of 300000 tons per day from the 7th to 8th year after the first phase is put into operation, with an annual output of 263000 tons of copper and 13000 tons of molybdenum after completion.

In addition, the upper ore belt of the Timok copper gold mine in Serbia by Zijin Mining is underground mining, with a designed production capacity of 3.3 million tons per year, a construction period of 2.5 years, and a total service life of 13 years. It is planned to be completed and put into operation by the end of June 2021, with an annual output of about 79600 tons of copper metal and about 2 tons of gold metal after reaching production capacity.

Overall, the pandemic has led to significantly lower than expected global copper mine supply, hindered project expansion, and hit copper mine supply repeatedly. Copper mines are expected to become a "dazzling" mineral in the future.

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