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Copper is one of the key raw materials for technological and industrial development globally. From infrastructure to emerging technologies such as electric vehicles, the demand for copper continues to grow.
However, supply has not always matched this demand, with periods of limited growth and delayed mining projects.
Between 2024 and 2028, the capacity of copper mines and refineries is expected to expand significantly, significantly affecting the global market.
Copper Mine Capacity Growth: A 3.3% Annual Increase
Over the 2024-2028 period, global copper mine capacity is expected to grow at an average annual rate of 3.3%, signalling a major turnaround from the modest 1% annual increase recorded between 2017 and 2020. This slow progress was due to the lack of major new mining projects, with a few exceptions such as the Cobre Panama mine.
The last few years have been characterised by a series of delays and postponements of mining projects, mainly due to permitting and capital investment issues. However, these postponements have created an ‘agglomeration effect’, where a considerable number of new projects and expansions of existing mines have gone into operation from 2021 until 2024.
Among the largest projects starting in 2024 are expansions of existing mines such as Kamoa and Tenke/KFM, while the Malmyzhskoye mine is scheduled to come into production in 2025.
Growth Projection between 2024 and 2028
During the 2024-2025 period , global mining capacity is expected to grow at an average rate of 3.7% per annum, while a more moderate growth rate of 3.1% per annum is projected for the period 2026-2028. This slowdown will mainly be due to the start-up of smaller projects, compared to the large operations launched between 2021 and 2024.
Between 2026 and 2028, new minor projects and smaller expansions will still be crucial to support the overall capacity increase. However, permit delays and environmental, social and governance (ESG) issues will continue to adversely affect the development speed of some projects.
China’s Role and Investment in Africa
Chinese investments abroad, particularly in Africa, will continue to play a key role in the development of global mining capacity. Mines in Congo and other African nations are receiving significant support from Chinese investors, who see these areas as a strategic source of copper supply to meet growing domestic demand.
In addition, the growing interest in exploration for seabed minerals, including copper, represents a future frontier for the industry. Although still at an early stage, this development could prove essential to complement land-based resources in the long term.
Increasing Copper Smelting Capacity: China in Command
During the period 2024-2028, global copper smelting capacity will grow at an average annual rate of 4%. China will continue to play a leadership role in this sector. In 2023, Chinese capacity was about eight times higher than in 2000, and is expected to increase by a further 30% by 2028. By the end of this period, China will contribute 55% to the global expansion of fusion capacity.
Outside of China, fusion capacity has remained virtually stagnant over the past 20 years. However, there are signs of recovery with new projects being developed in countries such as the Democratic Republic of Congo, India, Indonesia, Iran, Kazakhstan, Russia, Serbia, Saudi Arabia, South Africa, the United States, Uzbekistan and Zambia.
Some of these new smelting plants have already started production in 2024, and by 2028 the ex-China smelting capacity is expected to increase by about 2.2 million tonnes.
This expansion will also bring about a significant change in the trade flows of copper concentrate, with new markets emerging as exporters and importers of this strategic material.
The Development of Refineries: Focus on China and Electrolytic Technology
Copper refinery capacity will grow at an average rate of 3.5% per year between 2024 and 2028. Most of this growth will be due to the expansion of electrolytic refineries, which will account for 82% of the overall increase. In particular, China will continue to be the main driver of this expansion, with a significant increase in electrolytic refining capacity.
In terms of electro-extraction (SX-EW), annual growth of 3.2% is expected. However, by 2028, electroextraction capacity in Chile could decrease by 18%, while in the Democratic Republic of Congo it is expected to increase by 44%.
On the technical front, what do we expect (short-term)?
Since mid-May of this year, copper prices have remained within a descending channel, breaking out of it on 19 August, and displaying a subsequent settling phase, still visible today. The 200-day moving average seems to support prices while the 50-day moving average acts as the first resistance barrier.
Should the price hold the nearby support at the $9.087/mt level and form a rebound above the descending channel, we might see a price recovery towards the following levels:
- First target: $9,611/mt, corresponding to the 38.2% Fibonacci retracement level. This represents crucial short-term resistance;
- Second target: If the price manages to break above 9.611 $/ton, the next target would be around 10.154 $/ton (61.8% Fibonacci level).
This scenario would be supported by a bullish MACD crossover and an improvement in global commodity market sentiment, perhaps caused by factors such as strengthening industrial demand or a drop in global copper inventories.
Conclusions
Copper is currently in a critical phase, poised between a possible rebound and a continuation of the downtrend. Technical indicators such as the Fibonacci levels, the upward break of the descending channel and the MACD suggest that a rebound may be imminent, but it will be crucial to observe whether the support at $9.087/mt holds in the coming days.
If the price manages to break through key resistance at $9.611/mt, copper could rise towards $10.154/mt later this month.
LME Copper – 3 month $/ton daily
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