'World doesn't seem to get it': Glencore boss on copper

Glencore boss Gary Nagle says the company will not bring new copper production online until pricing reflects the severe market deficit (reports MiningNews).

CopperOre


Speaking during Glencore's investor day yesterday, Nagle said the company could double its copper production from its current 1Mtpa through expansions and other projects, but it would only do so once prices increased significantly.

"Few companies are in the position we are to increase their copper production, but we are not going to bring them on in a hurry; we want to see the supply deficit as real, and that is when the price is real and when the world is screaming for our production," said Nagle.

With copper stocks at very low levels, Nagle showed how much copper is needed to meet the International Energy Agency net zero emissions pathway by 2030, concluding supply will be short by 50.5 million tonnes.

He said energy transition copper demand would be 119.5Mt over that period, with renewable energy needing 100.1Mt of additional copper and electric vehicles and charging stations 19.4Mt. This will take world demand to an estimated 355Mt while global supply will be 304.5Mt over the time frame.

"We will need 50Mt over eight years. It is impossible. We cannot meet our net zero ambitions, and the price does not reflect this. … The world doesn't seem to get it," said Nagle.

Many analysts use US$3.50 per pound as the long-term copper price, close to current spot prices. The incentive price is often cited as $4.50/lb yet these levels last year did not see new developments commence. Anecdotally, people in the industry think a price of $6-7/lb is needed to incentivise new developments and the risks they entail.

In addition to the copper price and a lack of projects in the industry pipeline, Nagle said miners were not investing in copper mines due to financial, ESG and reputation, disruption and access risks.

Copper mine investment is estimated at US$19 billion this year, dropping to $12 billion in 2025, 67% below the 2012 peak of $32billion.

"The industry remains wary of multi-billion dollar investment," Nagle said.

"The ability of any miner to bring new production on stream in a short period of time is very challenging. Most companies do not have projects to build."

Glencore has a project pipeline which can build on its current output of 1Mtpa, although "our pipeline of projects is not that visible to the market," said Nagle.

Growth to 1.6Mtpa will come through expansions at the Collahuasi, Antapaccay and Mutanda mines, with El Pachon able to increase output to 2Mtpa.

"Glencore has the ability to double its copper production, but even if we build everything we have, the world will still be short of copper," said Nagle.

Nagle said he expects to see increasing copper production from Glencore's Britannia Refined Metals recycling business, which produced 41,000t of copper in 2021, 1500t of cobalt and 4400t of nickel.

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