As Mine Costs Skyrocket, Friedland Warns of Looming Copper Crisis

Last week, analysts and miners met in the state of Florida to discuss why the mining industry isn’t getting a lot of attention from investors. The Rule Symposium was held in Boca Raton and ran from July 7–11, 2024; the event was organized by Rick Rule, the founder of Rule Investment Media.

In a prerecorded video interview, Robert Friedland of Ivanhoe discussed how copper would likely face a supply shortage in the future. Friedland, who is the executive cochair and founder of Ivanhoe, stated that the world was already experiencing a shortage of copper, adding that despite this, the price of the red metal fell short of supporting the development of new projects.

Currently, the metal’s price stands at $4.60 per pound.

Friedland also called attention to the current crises in physical markets, noting that more copper would have to be mined in the next two decades in order to meet the increasing worldwide demand as countries around the globe transition to the use of clean energy.

In addition, Ivanhoe’s founder talked about the new copper mines in Peru and Chile, noting that these regions had seen costs shoot to roughly $45,000 per ton of daily installed capacity. He explained how these jurisdictions, once thought to have some of the cheapest and largest copper mines, has seen these costs soar primarily because of reduced output and inflation.

Thr latest data from Citigroup and BMO Capital Markets analysts shows that the price of copper may go past the $4.54 per pound mark again in the near time, mainly because of grid investments in China and a smelter supply shortage, also in China. In May, the metal’s price stood at $5.11 per pound.

Projections from the International Energy Agency expect that the demand for copper will grow from 25.9 million tons in 2023 to 36.4 million tons by 2040. This, according to projections, will be driven by the metal’s increasing application in the expansion of electric grids and clean technology. Despite this positive forecast, analysts continue to warn that the red metal’s price isn’t high enough to support new builds.

Friedland also highlighted copper’s important role in the global economy, particularly its significance in renewable energy and electrification as well as in modern warfare. He cited data on how the worldwide economy needed to find five or six new projects with roughly the same size as the Kamoa-Kakula mine annually in order to maintain a 3% GDP growth rate over the next 20 years.

As the supply squeeze gains momentum and prices register an uptick, extraction companies such as Southern Copper Corporation (NYSE: SCCO) stand to smile all the way to the bank as their production fetches higher returns.

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