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(Kitco News) - In its recent report, the Department of Industry, Science, Energy and Resources of the Government of Australia (DISER) said that the global energy transition to low emissions technologies is expected to positively impact copper consumption in the coming years.
DISER noted that copper’s conductivity, malleability and durability make it vital to electric vehicles (EVs), EV charging infrastructure, batteries, and renewable energy generation, adding that by 2030, 10% of refined copper consumption will be accounted for by use in EVs, batteries and charging equipment.
Importantly, according to the report, global copper consumption is expected to grow at an average annual rate of 2.7% in the coming years to reach over 30 million tonnes in 2028.
On the other hand, global mined copper production growth is expected to average 2.0% in 2023-2028, with production projected at 24 million tonnes by 2028.
Mined copper production growth is weighted to the first half of the outlook period driven by increases in production from Chile and Peru. However, growth in mined copper production is expected to slow towards the second half of the outlook period.
“Challenges facing mine operators include declining ore grades, higher production costs, aging facilities and increased environmental and social scrutiny. Declines in the quality of deposits will also mean that most new projects in the development pipeline lack the scale and cost advantages of existing mega projects,” the authors of the report found.
With significant copper demand growth expected over the outlook period, and with mined production growth likely to slow, it is projected that a market deficit will emerge.
DISER said that copper prices are expected to remain relatively stable towards the middle of the outlook period, as new supply from Chile and Peru matches rising demand.
However, it is forecast that demand will outpace supply from 2026, resulting in market deficits and upward pressure on prices. Higher production costs (partly due to declining ore grades), higher capex and higher financing costs will add to upward pressure on prices.
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