Glencore: Copper Shortages Will Continue Until Prices Rise

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Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--Glencore (Baar, Switzerland), one of the world's leading suppliers of copper, has warned that it will not bring any new copper production online until prices reflect the growing global shortage.

The company believes that achieving the International Energy Agency's (IEA's) net-zero emissions pathway will not happen, due to a predicted 50 million-tonne shortage of copper by 2030. It claimed increasing mine supply is challenging, given heightened "country and operational risks," and said that the industry remains wary of multi-billion-dollar investment decisions.

"Few companies are in the position we are to increase their copper production, but we are not going to bring them on in a hurry; we want to see the supply deficit as real, and that is when the price is real and when the world is screaming for our production," said Gary Nagle, Glencore chief executive officer, at a recent investor day. "The world just doesn't get it. It doesn't understand that there's a massive [copper] deficit coming."

He explained that global copper consumption stands at about 300 million tonnes a year, against future annual demand of 350 million tonnes. Of that, the ever-growing renewable power sector will need 100 million tonnes, while the meteoric rise of electric vehicles (EVs) and charging stations will need roughly 20 million tonnes. "It is impossible. The world will stop [without the additional copper supply]. But the price of copper is not expecting it."

Nagle added that Glencore could double its current copper production by adding another 1 million tonnes per annum (Mtpa), through new projects, mergers and acquisitions, but will not do so until the price of copper rises: "Glencore has the ability to double its copper production, but even if we build everything we have, the world will still be short of copper."

The company said it could grow its output through expansions at the Collahuasi, Antapaccay and Mutanda mines, with a US$3 billion project at Argentina's El Pachon capable of boosting output to 2 Mtpa.

Glencore is one of a number of major suppliers warning of a significant and sustained copper shortage. The world's leading copper supplier, Chilean state-owned miner Codelco (Santiago, Chile), warned recently that global shortages may hit 8 Mtpa by 2032 as demand outstrips the rollout of new mining projects.

"Considering that some copper deposits are in the process of stopping production and that other projects are in the process of starting operations, it is estimated that the deficit will be almost eight million tonnes in 10 years," said Maximo Pacheco, chairman of the board of Codelco, at the Asia Copper Week conference in Singapore.

Codelco studies show that the energy transition to combat climate change will see copper demand jump from 25 Mtpa to just more than 31 Mtpa in 2032. To cover this, the industry would have to develop eight projects the size of Escondida in Chile, the world's largest copper mine owned by BHP Group Limited (Melbourne, Australia), within eight years.

Earlier this year, Industrial Info reported that Latin America is poised to play a critical role in the energy transition due to its dominant role in the mining of copper and other minerals. Chile produces the most copper in the world, amounting to 28% of global production, according to Chile's National Geology and Mining Service (SERNAGEOMIN). In addition, Peru accounts for 10% of global copper production and Mexico produces 3.4% of the world's copper.

Industrial Info is tracking more than US$114 billion in copper mining investment in the Latin American region. Of this amount, about 18% is under construction and 78% is in the planning stage. Subscribers to Industrial Info's Global Market Intelligence (GMI) Metals & Minerals Project Database can click here for a list of detailed project reports. For additional information, see March 28, 2022, article - Latin America to Play Big Role in Supplying Copper for the Energy Transition.

Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).