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The world's largest copper producer may reduce production by 40%, and copper prices are taking off again?

In all fields from electric vehicles to wind turbines and solar power generation, copper is the most critical raw material indispensable. As countries turn to renewable energy plans, copper demand will surge, but copper supply has been severely challenged. The supply shortage does not lie in copper itself, but in mining projects.
On May 24, foreign media reported that nearly 40% of the copper output of Codelco, the world's largest copper producer, will be at risk of suspension. Currently, the Chilean Congress is reviewing the glacier protection bill, and the three main mines of Chile's national copper company Codelco, Andina, El Teniente, and Salvador, are all restricted by the glacier protection bill. The copper output of these three mines together accounts for nearly 40% of Codelco's total output.

The mining industry has always been in a very conservative environment. At the beginning of 2010, the mining industry invested heavily in copper mining projects. As a result, copper prices quickly collapsed, and any producers who invested heavily in new projects were punished. This has also resulted in no large-scale increase in investment in copper mine projects even at the current record copper price level.
At present, the number of copper projects is very limited. In the past 12-18 months, no new large-scale copper project has been put into production. The quality of current projects is "very poor" compared to 10 years ago, and the cost is high. The price of copper needs to rise further before there is an incentive to invest in more projects.

At the same time, the unions of Escondid, the world's largest copper mine in Chile, and Spence, another copper mine under BHP Billiton, have rejected the company's latest salary contract, and the threat of strikes continues to rise. Epidemics overseas have been repeated from time to time, and global copper supply is facing increasing uncertainty.

Before the outbreak of the epidemic, an organization estimated that the production capacity of large mines of more than 100,000 tons that may be put into operation in 2020-2023 will increase the production capacity by about 1.9 million tons per year, and the overall mine expansion is likely to exceed 2 million tons. But the epidemic broke out, many projects had to be postponed.

The Chilean National Copper Commission announced that the MineJusta project, which was supposed to be put into operation at the end of 2020, will be "delayed for several months", and the start-up time will be postponed to 2021; BHP Billiton also announced that due to the new crown epidemic, the workforce has been reduced and its Spence copper mine in Chile will expand production The project is tentatively postponed to 2021; Tektronix Resources announced that it will restart the Quebrada Blanca Phase II project, but the commissioning time will be postponed from the second half of 2021 to 2022; the strikes of Ceninela and Michiquillay miners are pending, and the expansion plans are expected to be postponed for one year each.
The Kamoa-KaKula copper mine is relatively smooth. The Canadian Ivanhoe Mines Company is expected to officially put into operation in the third quarter of 2021. The first-phase design capacity will handle 6 million tons of ore per year, and the annual output will exceed 300,000 tons of copper, with an average early treatment grade of 6%. the above.

In addition, Zijin Mining's Timok copper-gold mine in Serbia is underground mining. The designed production scale has an annual processing capacity of 3.3 million tons. The infrastructure period is 2.5 years and the total service life is 13 years. It is planned to be completed and put into operation by the end of June 2021. The annual output of copper metal is about 79,600 tons and gold metal is about 2 tons



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