Copper prices will not slide below $2.50 per pound anytime soon thanks to a stable Chinese economy, Indian growth and the spread of copper-hungry electric vehicles, said Ivan Arriagada, CEO of Antofagasta, a major Chilean copper mining company headquartered in the U.K.
The metal is now trading at about $3.10, up about 50% from its 2016 low.
China, the world's biggest consumer of copper, is a big reason for what Arriagada called his "favorable outlook for copper prices and the copper market."
"We continue to see favorable demographics [in China]," the CEO said. The country's ongoing urbanization, he said, "means more housing, more consumer goods, more investment in electrical grids."
He sees India as the most promising market after China, and one with plenty of room to grow. "Copper consumption in India is around 2 million tons, compared with China's 9 million tons," Arriagada said. However, "India may become more important ever, because copper demand there is growing at over 8% per year," he said.
The CEO also cited the growth of "clean energy and transport" as another favorable factor. "Renewable energy and electric vehicles will have a very important impact on copper demand," Arriagada said, adding that, "While a conventional car uses 25kg of copper, an electric car uses around 80kg."
China is heavily promoting electric vehicles, and France and the U.K. have announced plans to prohibit the sale of gasoline cars by 2040. Arriagada said the spread of electric vehicles is happening faster than expected and will have a huge positive impact on copper demand.
Supply-side restrictions
Also helping push up copper prices are restrictions on the supply side. "The pipeline [for new mining projects] remains very dry," Arriagada said.
The company kicked off full-capacity production at Chile's Antucoya mine in July in cooperation with Japanese trading house Marubeni. But other than that, "There are not many new projects," Arriagada said. He said that project is the only new one coming to the market this year, and that one is in the works for next year. - Source: Nikkei -