The copper price surged to a fresh two-year high this week amid, among other factors, ongoing worries about pandemic-hit supply from top producer South America.
Wood Mackenzie estimates that about 700,000 tonnes of new copper supply has been pushed out of 2022 expectations by delays, compared to previous forecasts.
The research firm also suggests there will be a four million tonne demand growth of copper between now and 2028, compounded with a five and half million tonne gap.
Approximately one-third of copper demand growth is for energy transition use, and the metal’s relative low carbon intensity makes it one of the greenest of all metals, Canadian copper-gold miner Hudbay Minerals’ CEO Peter Kukielski told MINING.COM.
Kukielski said a big factor playing into current copper price strength is the number of project deferrals due to the coronavirus pandemic.
“The suspension period saw the lowest levels of copper prices this year,” he said.
Hudbay’s Constancia in Peru is the lowest cost open-pit sulphide copper mine in South America. The property also includes Pampacancha, a high-grade satellite copper deposit.
Hudbay expected to start mining the Pampacancha satellite deposit in late 2020, but restrictions imposed to fight the coronavirus pandemic limited the government’s ability to consult with a local indigenous community, Kukielski said in February.
Hudbay was among numerous miners in Peru, the world’s no.2 copper producer after Chile and its sixth-largest gold producer, to shutter operations after the government declared a state of emergency to slow the spread of the coronavirus.
When the Peruvian government gave consent, Hudbay was ready to restart in May, and it ramped up to full production within 48 hours.
“We’ve been dealing, since June, with a copper market that is essentially balanced,” Kukielski said. “We’ve seen recovery in China, on the one hand, and on the other hand we are seeing a growing supply disruption, mostly in Chile. As a result, you get a growing potential deficit.”
Kukielski pointed out the pandemic- induced project deferrals has exacerbated this.
“These deferrals tend to extend the upcycles. I think the medium term is likely to be very attractive for copper,” he said. “The suspension period saw the lowest levels of copper prices this year.”
Kukielski said Constancia is now operating at full capacity, and no coronavirus cases have been identified at the mine, as incoming workers isolated at Cusco for seven days and tested.
“We are operating at full capacity in Canada and in Peru.”
He also said Hudbay is aggressively advancing development of the Pampacancha deposit, and is expected to be in production early in 2021.
“It utilizes Constancia’s infrastructure and when it is in full production we expect to produce over 100,000 tonnes of copper from our Peru business,” he said.
Constancia on its own produced 113,825 tonnes of copper in 2019.