Ivanplats says “the way the deep-thinking Paul Gait and Rusne Didziulyte at international think tank Bernstein Research see the eternal supply-and-demand conundrum evolving, Chile’s peak production years as the world’s premier copper supplier are behind it – and, as far as anybody knows, there are no budding producers with copper endowments to match Chile’s being groomed backstage to step into the looming supply gap.” The Bernstein researchers believe that existing reserves of copper are sufficient to meet only one-third of the world’s incremental demand by 2030. In this thought-provoking analysis, Bernstein ranks Oyu Tolgoi as the world’s most significant new producer and sees a significant portion of future copper supply coming from the “New Frontier” locations of the Democratic Republic of Congo (where Ivanplats is advancing its Kamoa mine development), Zambia and Peru.
The copper price will have to approach US$10,000/t in the medium term, in the next three or four years, to incentivise the next wave of production growth, the analysis concludes.
“New discoveries are incapable of meeting the world’s copper demand. This leaves one alternative – namely, higher prices and the ability to supply the world from deposits that do not meet investment thresholds at today’s prices.
“There is, of course, more than ample copper in the ground to meet future demand. The only real question is the long run price required to enable this to take place. In the absence of significant technological improvement, moving metal that is uneconomic to exploit to metal that is economic to exploit requires one thing – namely, higher prices. Consequently, we conclude that the call for structurally higher copper prices is a fair reflection of the state of the world’s copper supply.”
In Part 2 of the report, the analysts explain the role that they expect the dramatic lowering of cutoff grades will play in influencing future mining costs and commodity pricing, and suggest some significant economic implications for the global copper industry. On the projection of $10,000/t copper: “It is only a question of when, not if, this occurs.”