The copper market continues to attract significant attention as demand rises amidst the global energy transition and sustained growth in infrastructure and construction sectors.
According to insights shared by Punit Kumar from Wood Mackenzie, a ‘robust demand outlook’ is anticipated, driven by developments in electric networks, transportation, and renewable energy infrastructure.
Despite this strong demand, the supply side is tightening, as evidenced by historically low treatment and refining charges (TCRCs) for copper.
These rates, which cover costs for refining copper concentrate, have fallen substantially, indicating a more constrained supply environment.
“TCRCs have been in negative levels for a while now, raising concerns for smelters and potentially delaying construction projects,” Kumar said.
The low TCRCs, alongside limited concentrate supplies, create challenges for marginal smelters and could slow down the development of new facilities.
Adding to supply constraints, global investment in copper has witnessed a geographical shift, with significant capital flows now coming from China and other non-Western sources.
Since 2000, China has accounted for 75 per cent of global smelter capacity growth and currently controls 97 per cent of global smelting and refining capacity, contributing over three million tonnes (Mt) of production and nearly $US25 billion in investment.
Traditional Western investors have faced challenges in maintaining influence, as Chinese-backed projects, particularly in Africa, continue to dominate.
This shift in investment also reflects changing project dynamics with South America remaining a key copper producer, though many projects there face higher capital intensity and lower ore grades.
Projects in Africa, supported primarily by Chinese funding, are expected to fill emerging supply gaps.
“The focus on African projects represents a notable investment pivot, with Chinese investors taking on the risks that Western counterparts may be less inclined to accept,” Kumar said.
While some new regions like Argentina, Pakistan, and the Philippines are emerging on the copper mining map, they come with logistical and regulatory challenges that could complicate production timelines.
Overall, the copper market is positioned for sustained demand growth, but the evolving landscape of investment and supply constraints will be pivotal.
“These dynamics make copper an increasingly complex but crucial sector, especially as global demand continues to rise,” Kumar said.
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