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Mining Giant Glencore Sees Huge Deficit In Copper Coming

A huge shortage of copper is looming, mining and commodities giant Glencore said in an investor update this week, reiterating warnings from other industry players and analysts that a supply crunch could slow the energy transition.

Commodity shortages are looming, and significant mine development is lagging, the mining giant said in a presentation.

“There’s a huge deficit coming in copper, and as much as people write about it, the price is not yet reflecting it,” Glencore’s chief executive Gary Nagle told analysts at the presentation, as carried by Bloomberg.

According to Glencore’s estimates, under the net-zero emissions pathway of the International Energy Agency (IEA), the world will be more than 50 million tons short of copper between 2022 and 2030.

“But increasing mine supply is challenging given heightened country and operational risks and the industry remains wary of multi-billion dollar investment decisions,” Glencore said in the presentation.

The miner plans to expand its copper portfolio with a new project, El Pachon, in Argentina.

However, globally the copper industry’s expansionary capex is expected in 2025 to be at $12 billion, which would be 61% below the 2012 peak of $32 billion, Glencore said in its presentation, citing estimates from Wood Mackenzie.

The IEA has said for years that rising deployment of clean energy is “set to supercharge demand for critical minerals.” By weight, mineral demand in 2040 will be dominated by graphite, copper and nickel, the IEA said. The growing need for grid expansion will underpin a doubling of annual demand for copper and aluminum by 2040, the agency said last year.

Copper prices are set for a new record-high next year amid an “extremely” tight market, Goldman Sachs said this week.

“The sequential increase in policy targets and commitments to green transition, alongside a minimal supply response so far... have resulted in earlier and larger open-ended deficit conditions that essentially are already here, not beginning at some point in the future,” Nicholas Snowdon, metals strategist at Goldman Sachs, said, as carried by Financial Review.

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Goldman expects copper prices to top in 2023 the current record-high of $10,845 per ton hit in March 2022, and raised its 12-month price target to $11,000 a ton from $9,000 per ton.

By Charles Kennedy for Oilprice.com

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