US runs out of copper – Richard Mills

2024-05-19

AOTH has been warning for 2 years this was going to happen

5 mines are expected to supply 80% of the world’s future copper demand going forward.

Four of the five new large mines/ expansions have offtake agreements already in place. The five are Kamoa-Kakula in the DRC, Cobre Panama, and expansions at three existing Chilean mines — Escondida, Spence, and Teck Resources’ Quebrada Blanca (QB2).

Our analysis showed in the case of Kamoa-Kaukula, 100% of initial production will be split between two Chinese companies, one of which owns 39.6% of the joint venture project. Nearly half of Cobre Panama’s annual production was going a Korean smelter under a 2017 offtake agreement. That mine shut down last fall, eliminating nearly 350,000 tonnes of annual production.

Escondida and Quebrada Blanca are both partially owned by Japanese companies — one can assume that a corresponding percentage of production will be going there. 

Fact is, the West has almost no off-take agreements in place for 80% of the world’s future copper supply.

That supply is locked up. It’s been previously stated that we need to find 6 million more tonnes of copper, 1 million per year of new copper production if we want to alleviate the deficit — the equivalent production of one Escondida mine each year  — but only one of the five mines, Kamoa, has the capability of producing close to that much copper. But Kamoa’s production is going to China.

At AOTH we make a clear distinction between global copper supply and the global copper market. Mined copper that is locked up by offtake agreements should not rightly be lumped in with global supply, because it will never reach the United States, Canada or Europe. Instead, this copper will go straight to smelters in China for use in Chinese industry, to South Korean smelters for South Korean industry, and to Japanese smelters for Japanese industry.

Richard (Rick) Mills
aheadoftheherd.com
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