Mining executives rarely agree on much, but most now share one view — the world is speeding toward a copper shortage. The real question is how to respond.
At first glance, Anglo American’s $54 billion merger with Teck Resources seems like a promising solution to global supply concerns. Copper is essential for the green energy transition, but in reality, new output only increases once shortages push prices high enough.
According to the International Energy Agency (IEA), total global copper mine production in the past year was about 23 million tonnes, led by BHP, Codelco, and Freeport-McMoRan. Projects already announced could lift output to 24 million tonnes by the late 2020s, but without new supply sources, production may drop below 20 million tonnes by 2035. Meanwhile, demand could surge to 33 million tonnes — driven by global electrification — leaving recycling unable to close the widening gap.
Adding to the strain are unexpected shutdowns. Freeport-McMoRan’s Grasberg mine in Indonesia halted operations after a fatal accident, sending shares down more than 15% in a single day. Other miners face challenges in Panama and the DRC. Citigroup analysts project global copper output growth of only 1.3% in 2026 — far below the long-term 2.5% average.
Economics suggests that higher prices will eventually encourage new investment. Indeed, copper prices recently approached last May’s two-decade high. But inflationary pressures from the pandemic have sharply raised production costs. The IEA estimates that capital spending needed to bring new supply online in Latin America has jumped 65% since 2020. Even brownfield expansions — which build on existing sites — now face escalating expenses.
BHP estimates average development costs at $23,000 per tonne, while Teck’s Quebrada Blanca mine reaches $29,000 per tonne and Antofagasta’s Centinela project $30,000 per tonne. For a 200,000-tonne-per-year greenfield mine, that implies up to $6 billion in upfront investment. Investors say copper prices would need to exceed $12,000 per tonne to justify such spending. Given the average 17-year timeline from discovery to production and mounting permitting hurdles, few executives are eager to commit capital.
This explains the appeal of the Anglo-Teck deal. By merging without a premium, Anglo effectively secured Teck’s 500,000 tonnes of annual copper production for about $30,000 per tonne — without the delays of developing a new mine. Together, they could add another 175,000 tonnes by 2030 through nearby synergies.
Yet, such large-scale M&A may not solve the broader shortage. Wood Mackenzie predicts combined output could even decline as the merged company prioritizes high-return assets. New discoveries are also dwindling — of 239 copper deposits found since 1990, only 14 were discovered in the past decade. Meanwhile, exploration budgets have fallen to below 3% of EBITDA, compared to over 6% in the early 2010s.
With constrained supply, analysts expect copper prices to keep rising. Bank of America forecasts an average of $11,313 per tonne in 2025, climbing to $13,500 by 2027. If those projections come true, miners may finally feel the urgency to invest — though any new capacity would take years to reach the market, leaving EV and renewable manufacturers facing persistently high costs in the meantime.
[Source – 上海有色网] 矿企巨额交易难解铜短缺之困 https://news.smm.cn/news/103568625
