The copper market has for years experienced declining ore grades at major mines, and this combined with consistent demand growth could lead to deficits in the coming years, according to analysts at Goldman Sachs, who see prices reaching $8,000 per tonne this year.

But mining companies are finding it more difficult to bring projects through from exploration to commercial production, panellists said.

“To build a large volume project from the outset until production is at least ten years, so the capacity today for the mining industry to react to increased demand is not as it was before,” Codelco commercial vice president Rodrigo Toro said.

Modern projects need to pay closer attention to community liaison and water availability at a time of increasing scarcity.

Mining development permits for projects in Australia that used to take 18 months to obtain, now take around four to five years, Delloite partner Tim Biggs said.
“These requirements are good for the world in general, but for miners it has meant that the go/no-go factor is so much bigger. It takes so much longer so the obvious consequence is that many [copper mines] are not being made,” Biggs said.

Copper mining companies are slowly coming back to the idea of raising capital expenditure after copper prices dropped below $2 per lb [$4,400 per tonne] as recently as January 2016.

“A lack of exploration leads to a lack of projects and that causes a lack of supply,” Atlantic Copper ceo Javier Targhetta, who is also senior vice president of marketing and sales for Freeport McMoRan, said.

The heightened risk of economic nationalism is also turning companies off investing in new projects, Targhetta added.

This week executives from companies such as Glencore, Randgold Resources and Ivanhoe are in the Democratic Republic of Congo attempting to dissuade the country from bringing in higher taxes on raw material mining.

Board level blues
Mining companies have had their hands burned on large-scale investments in recent years, heightening the reluctance to make similar investments.

In 2016, the ceo of Polish state mining company KGHM labelled his predecessor’s purchase of rival producer Quadra FNX and the Sierra Gorda copper project “a mistake”.

“I think boards are much more nervous about committing to these enormous projects, particularly because it takes so long to get to a cashflow positive position,” Delloite’s Biggs said.

Traded spot copper concentrate TC/RCs dropped to their lowest levels since 2013 as traders bid aggressively for tonnes ahead of an expected mine deficit.