https://www.engineeringnews.co.za
Africa|Copper|Energy|Environment|Indaba|Mining|PROJECT|Projects|Renewable Energy|Renewable-Energy
Africa|Copper|Energy|Environment|Indaba|Mining|PROJECT|Projects|Renewable Energy|Renewable-Energy
africa|copper|energy|environment|indaba|mining|project|projects|renewable-energy|renewable-energy-company

Copper market facing renewed caution from investors

26th June 2024

By: Sabrina Jardim

Creamer Media Online Writer

     

Font size: - +

With the demand for copper having increased amid the global energy transition, Benchmark Mineral Intelligence project manager: energy transition commodities Piotr Ortonowski described this year as “the year of the unexpected” for copper.

Speaking at a panel discussion at this year’s London Indaba under the theme ‘Copper: defying gravity- or was it all just hype?’, he explained that this year was expected to be a year of oversupply, with a few big mining projects still ramping up.

“The word on the street was that we're going to be in a surplus of half a million tonnes plus. However, what transpired was quite unprecedented,” he said, pointing out that the tail end of the first quarter of this year had seen an unexpected level of mine disruptions and production guidance cutbacks.

“Effectively, in a few months, we lost over a million tonnes of copper production from the 2024 balance. I would say the immediate effect of that was most profoundly felt in the copper concentrate market ,” he said.

He explained that the treatment and refinement charges of a discount for copper concentrates plummeted to historic lows, which was most felt by the smelting industry.

“Shortly after, we heard from the Chinese smelting industry that . . . they're planning to cut back production by 5% to 10%, and this really thrust copper into the spotlight of the investment community . . . and what we saw from that point onwards is a huge inflow of speculative money into the copper market.”

He pointed out that there was now slightly more renewed caution in the market, noting that a key concern for investors was the Chinese market, which Ortonowski said had not witnessed much evidence of this supply tightness yet.

“In fact, we've seen quite the opposite. We've seen a counter seasonal stock build in the second quarter of this year, which is typically the peak quarter of Chinese copper consumption,” he said.

He noted that there have not been any pronounced cutbacks to refine production in China, and that there has been a lot of scrap flowing into the market this year, in response to higher copper prices, which he said had helped offset some of the tightness on the concentrate side.

Ortonowski also noted that there had been a significant drop off in demand and that premiums were turning negative. 

“I think what investors are looking for is to see a pronounced pick-up in copper demand, now that copper prices have corrected by over $1 000 since their peak.”

Ortonowski also argued that copper was moving into a period of above-trend copper consumption growth which was expected to primarily be led by renewable energy, the electric vehicle (EV) market, as well as demand from the electricity transmission grid, which was driving copper demand in the long term.

“I think we're moving into a new era of demand where we might see, instead of 2% to 2.5% growth per annum copper demand, we'll probably see 2.5% to 3% demand growth, which might not sound like a lot, but it is, in absolute terms,” he said.

From a demand perspective, Ortonowski noted that the medium-term outlook was looking “very choppy,” explaining that the pipeline of advanced projects was slim.

He explained that there was not a lot of new supply expected to come on line, adding that many existing producers were struggling to maintain volumes.

“In the face of this, I think we can only really rely on a few sources of additional production . . . we might see mine life extensions as cutoff grades fall due to higher prices, we might see debottlenecking projects and we might see the inflow of additional scrap, but, ultimately, I would argue that's probably not going to be enough, and I think some stock drawdown and potentially demand destruction is inevitable.”

He argued that it was necessary to consider where mines could come on stream quickly, arguing that Africa was a “perfect candidate” in this regard.

Echoing this sentiment, Vedanta Base Metals CEO Chris Griffith noted that, while the grade of copper globally was dropping, good-quality assets could be found in Africa. He argued that the strive to secure critical minerals was, therefore, playing out in a positive way for African mining assets.

“Those [mining companies operating] in Africa – in Zambia and the Democratic Republic of Congo – are actually seeing a very conducive mining environment that I think is going to play out very positively for those copper miners that are [operating in] one of the best copper mining jurisdictions in the world,” he said.

Also speaking on the panel, First Quantum Minerals CFO Ryan MacWilliam agreed that leadership was important in the African mining sector.

“Africa has the orebodies . . . and it's down to the individual countries within Africa to do the right things to make sure they are the places that attract capital,” he said.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

Comments

Latest News

Showroom

SABAT
SABAT

From batteries for boats and jet skis, to batteries for cars and quad bikes, SABAT Batteries has positioned itself as the lifestyle battery of...

VISIT SHOWROOM 
The Southern African Institute of Mining and Metallurgy
The Southern African Institute of Mining and Metallurgy

The SAIMM started as a learned society in 1894 after the invention of the cyanide process that saved the South African gold mining industry of the...

VISIT SHOWROOM 

Latest Multimedia

sponsored by

Economic growth a top priority for GNU
Economic growth a top priority for GNU
19th July 2024 By: Creamer Media Reporter
Magazine round up | 19 July 2024
Magazine round up | 19 July 2024
19th July 2024

Option 1 (equivalent of R125 a month):

Receive a weekly copy of Creamer Media's Engineering News & Mining Weekly magazine
(print copy for those in South Africa and e-magazine for those outside of South Africa)
Receive daily email newsletters
Access to full search results
Access archive of magazine back copies
Access to Projects in Progress
Access to ONE Research Report of your choice in PDF format

Option 2 (equivalent of R375 a month):

All benefits from Option 1
PLUS
Access to Creamer Media's Research Channel Africa for ALL Research Reports, in PDF format, on various industrial and mining sectors including Electricity; Water; Energy Transition; Hydrogen; Roads, Rail and Ports; Coal; Gold; Platinum; Battery Metals; etc.

Already a subscriber?

Forgotten your password?

MAGAZINE & ONLINE

SUBSCRIBE

RESEARCH CHANNEL AFRICA

SUBSCRIBE

CORPORATE PACKAGES

CLICK FOR A QUOTATION







sq:0.433 0.498s - 190pq - 2rq
Subscribe Now