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The global copper industry needs to spend more than $100 billion to build mines capable of closing what could be an annual supply gap of 4.7 million tonnes by 2030.
The supply gap for the next decade is estimated at six million tonnes a year as the clean energy and electric vehicle sectors grow.
This means the world would need to build eight projects the size of BHP’s Escondida (ASX: BHP) in Chile, the world’s largest copper mine, in the next eight years. Such a task seems questionable rather unlikely, given the larger scale developments required and the fact that about half of the projects in the pipeline are greenfield.
Some large copper mines have been activated in the last three years. First Quatum’s Cobre Panama reached commercial production in September 2019. The asset is estimated to hold 3.1 billion tonnes of proven and probable reserves and at full capacity can produce more than 300,000 tonnes of copper per year.
Ivanhoe Mines began production of copper concentrate at its Kamoa-Kakula project in the DRC in May last year, reaching commercial production in July.
Anglo American mined the first ore at its Quellaveco mine, located in the Moquegua region of Peru, in October 2021. The mine is expected to reach commercial production by mid-2022, generating between 120,000 and 160,000 tonnes of copper this year, and 300,000 tonnes per year for the first 10 years at full production.
While copper projects are in the pipeline, producers are wary of repeating the oversupply mistakes of past cycles, accelerating plans at a time when mines are becoming much more difficult and expensive to build.
Some of the next decade’s new supply will potentially come from the Reko Diq deposit in Pakistan, as Barrick Gold reached an agreement last week that ended its long dispute with the country’s government.
Alcantara Group’s Tampakan project in the Philippines is also expected to help fill the global supply gap, as is Seabridge Gold’s KSM project in British Columbia, Canada.
Rio Tinto is developing a $6.93bn underground expansion of the giant Oyu Tolgoi copper-gold mine in Mongolia, which has been plagued by delays and cost overruns. First production has been postponed several times and is now scheduled for the first half of 2023.
The market is also closely following what SolGold is doing with its Alpala copper-gold project on the Cascabel property in Ecuador.
The company has yet to release a pre-feasibility study (PFS) for the project, but says that once developed, it would produce an average of 150,000 tonnes of copper, 245,000 ounces of gold and 913,000 ounces of silver in concentrate per year over its 55-year life.
