Copper Production Winds Down Due to Lockdowns

The International Copper Study Group (ICSG) published its copper market forecast for 2020-2021, reporting that copper production will see a 1.5 percent decline in 2020 with an estimated 4.5 percent recovery in 2021. Experts like Colin Hamilton, Mining Analyst at BMO Capital Markets, have also projected a 1.7 percent decline in worldwide copper production followed by an increase of 4.1 percent in 2021.

This month, government delegates and industry advisors agreed that lockdowns in some of the most important copper producers like Chile, Peru and Mexico, were the main contributor to the 3.7 percent collective decline in production. World refined copper balance futures shows a deficit of 50,000 tons in 2020 and a surplus of 70,000 tons for 2021.

An ICSG press release mentioned that in 2019, the production fall was mainly due to Indonesia’s operational issues. However, this year production will continue to decline following intermittent lockdowns.

New projects like Tominskoye in Russia and Deziwa in Congo, that have partnered with mines like Cobre de Panama will be essential for the industry’s recovery. Nevertheless, the ICSG prediction for this year is 700,000 tons lessthan what was expected in October 2019.

ICSG’s press release mentioned that the 4.5 percent increase in production expected for 2021 will depend on global measures to control the pandemic leading to an increase in supply at recently commissioned mines and the implementation of other projects such as Kamoa Kakula in Congo and Spence Sulphide Project in Chile.

Copper use is expected to remain stable in 2020 and grow by a 1.1 percent in 2021. Copper demand forecasts show a decline of 9 percent in China, of 8 percent in the EU and 6 percent in the US. However, sustained growth in copper demand is expected because of its importance to different economic sectors. In addition, clean energy projects will drive future growth in demand.

Countries like Mexico where the mining industry is essential for economic development have started to reactive their national deposits and have implemented protection measures that will allow the continuation of mining production.

In a recent Mexico Business News article, it was mentioned that despite the pandemic, companies have restarted operations to achieve their 2020 production guidance. According to Sierra Metals, copper and gold production in big mines like Cusi and Bolivar in Chihuahua achieved a mineral production record in 3Q20.