Commodities, Copper, News

Copper prices close in on record territory


Copper prices have leapt to near-record levels on the London Metal Exchange after closing at $US10,281 ($13,873) on Monday as strong demand for clean energy technologies continues.

The price was within reaching distance of the record $10,747.50 from May 2021. Copper demand is being fuelled by an increase in electric vehicles and renewable infrastructure developments.

“Equipment and building construction are the largest end users of copper, making up 31 per cent and 28 per cent of total demand, respectively,” a report from ING stated.

“Infrastructure and transportation follow at 16 per cent and 13 per cent, respectively, whilst the remainder goes towards the industrial sector.”

ING forecasted that copper demand from road transportation and the power sector will increase by 117 per cent between 2020 and 2040.

Fitch Solutions stated in early October that copper mine production should increase by 7.8 per cent in 2021 due to new projects coming online and reduced output from the COVID-19 pandemic last year.

“We forecast global copper mine production to increase by an average annual rate of 3.8 per cent over 2021-2030, with annual output rising from 20.2 million tonnes in 2020 to 29.4 million tonnes by the end of the decade,” Fitch stated.

In September, Fitch Solutions revised its copper forecasts for 2021 and 2020 to $US9200 and $US8800 per tonne, respectively, up from $US8700 per tonne and $US8370 per tonne.

“Over the long term to 2030, we forecast the copper market will remain in deficit as consumption continues to outpace supply, driving prices higher amid the green transition,” Fitch Solutions stated.

Major mining companies continue to prioritise future production of copper to tap into the strong prices, with gold miner Newcrest Mining joining this trend.

Copper is a by-product of Newcrest’s operations including the Cadia mine in New South Wales.

The company produced a company record 143,000 tonnes of copper in the 2020-21 financial year, which contributed 22 per cent of its $US4.5 billion ($5.4 billion) revenue.

“In addition to gold endowment, Newcrest has a significant exposure to copper. We have ore reserves estimating 6.8 million tonnes or approximately 15 billion pounds,” Newcrest chief executive officer and managing director Sandeep Biswas said at the Denver Gold Forum presentation last month.

“While Newcrest will remain a gold company, this potential increase in copper provides significant benefits, which include earnings diversification, the copper credits which improve both our all-in sustaining costs (AISC) and free cash flow.”

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