IT is a truth universally acknowledged that a deficit in the copper market is coming.
When the penny will drop is less clear and a topic of discussion yesterday at the Mining News
Select conference in Perth.29Metals managing director Peter Albert said the copper deficit was expected to reach somewhere in the order of 5-12 million tonnes by 2035, requiring an escalation of supply. "Three 300,000 tonne per annum mines per annum from here on in is just mind-blowing," he said. Jefferies analyst Christopher La Femina recently noted that copper production from the world's biggest miners had increased in the June quarter due to the ramp-up of the large new Kamoa-Kakula and Quellaveco mines.He is forecasting deficits to kick in from 2025, at the earliest and warned that risk to overall supply remained to the downside."Even in a world of 2% global GDP growth, we would expect persistent deficits in the copper market, with prices rising over time," LaFemina said. The panel agreed 2025 could be the tipping point. Morgans copper analyst Sharad Bhat pointed to aggressive climate targets set globally for 2030 and 2050."To make that happen you need a lot of copper and it's not that easy," he said. Albert said every electric vehicle required 80kg of copper and to achieve net zero by 2050 could require a global fleet of 1.5 billion EVs."Sooner or later, the penny has to drop," he said. Corporate action Despite a decline in the copper price from over US$9300 per tonne since February, the big companies all want more copper and are taking a long-term view."The prices being paid for assets today are not based on today's prices," Albert said.Big deals in the copper space in the past few years have included Sandfire Resources' MATSA buy, South32's acquisition of a stake in Sierra Gorda, Harmony Gold's acquisition of Little Eva and Metals Acquisitions' Cobar buy.There's also large numbers being rumoured for Chinova Resources' Queensland copper assets and the Khoemacau operations in Botswana.Sunstone Metals managing director Malcolm Norris said equities were still priced for the short-term."Often you get a knock on the door from the corporates ahead of the share price running," he said.The panel agreed Newmont Corporation's looming takeover of Newcrest Mining was more about exposure to more copper, rather than gold.Barrick Gold has also made it clear it wants more copper exposure."I think we'll see more of these gold companies becoming copper companies," Norris said.While Albert said the "penny had dropped" for the majors, it was different for small companies."They're holding on and waiting for either a takeover or higher prices," he said.Norris said more M&A action in the copper space would build momentum. "We need to see it happen and it will in the right timeframe," he said."It just takes one or two drill holes or one or two deals to set the space alight."
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