There will be a supply gap of 6m tonnes by the mid-2020s, but the projects needed to fill that gap face an uphill struggle.
The copper market has cooled considerably since hitting an intraday record of $4.888 a pound ($10,776 a tonne) in May, but the long-term fundamentals for the metal's weathervane commodity remain in place as a result of global efforts to electrify transport and shift to renewable energy generation.
Erik Heimlich, chief copper analyst at CRU Group, recently told a seminar entitled "Leading the Green Revolution in Base Metals" that the long-term supply gap from the mid-2020s would be 5.9m tonnes.
The 10-year supply gap, compared with just over 20 million tons of annual production last year, refers to the gap between demand and primary output from existing and committed projects.
Heimlich says the industry is not facing a particularly tough supply gap by historical standards -- it's been more than 5 million tons for the past seven years, including a brutal time at the bottom of the commodity market in 2015 and 2016 -- and copper is worth half that now.
However, according to Heimlich, the industry faces many challenges in filling this gap, as developers are forced to adjust an increasingly complex and fraught process to bring these projects into production.
Permit delayed D. delayed
Mr. Heimlich said ESG's concerns and stakeholder demands will change project approval trends in the industry for decades to come.
Environmental, local community and land ownership issues, coupled with the willingness of politicians and NGOs to fan the flames, are major obstacles to many of these projects, and those that seem possible today may soon be considered possible or speculative.
Hudbay Minerals' Rosemont copper project, for example, has been in trouble for more than a decade as different authorities battle over which authority to take over, complicating an already lengthy review and consultation process.
A decision on the Toronto-based company's appeal, after a lower court denied Forest Service mine plan approval, is not expected until later this year. (Forest asked Fish and Wildlife to start consulting again seven years ago after the ocelot was spotted on camera in the area.)
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