Copper Supply-Demand Dynamics Declining Rate of Major Copper Discoveries
Recent S&P Global Commodity Insights data paints a sobering picture of copper exploration and discovery trends. Despite a 12% increase in exploration budgets in 2023, the industry has seen only four major discoveries in the past five years (2019-2023), totaling a mere 4.2 million metric tons (MMt) of copper. This marks a significant downturn in the frequency and size of major discoveries compared to previous decades.
Supply-Demand Dynamics & Market Outlook
The copper market is heading towards a significant supply-demand imbalance:
- A refined copper deficit is projected to begin in 2027
- The concentrate market is currently in deficit and expected to remain so for the next five years
- Mine supply is forecast to peak in 2029
- A potential concentrate deficit of 2.2 MMt is expected by 2032
Average time from discovery to production has increased from 12.7 years (for mines starting in 2005-2009) to 17.9 years (for mines starting in 2020-2023)
- Longer exploration, permitting, and study phases contribute to these delays
Investment Implications
The current state of the copper market presents several implications for investors:
1. Potential for Price Appreciation: The looming supply deficit, coupled with increasing demand (particularly from green technologies), suggests potential for sustained higher copper prices in the medium to long term.
2. Value in Exploration Companies: With the scarcity of new major discoveries, companies successfully identifying new large-scale deposits could see significant value appreciation.