Copper prices hit an eight-year high in January, reaching US$8103/t on the London Metal Exchange, with analysts predicting the price rise to continue in 2021, as high as US$9500/t in the fourth quarter.
The green energy drive by global governments, the transition to electric vehicles and the push by the mining industry to lead the ESG movement through decarbonisation and emissions reductions, sees the demand for copper rising in the medium term as supply struggles to catch up.
After falling to its lows in March 2020 where it plummeted to around US$5000/t from the COVID-19 lockdowns, prices have rebounded sharply since June, reaching US$5700/t that same month, followed by further highs of US$6800/t in September and US$7674.50/t in December.
ABN AMRO Group senior economist for industrial metals markets Casper Burgering sees the metal “averaging $9500/t in the fourth quarter this year, with the market likely flipping into a deficit as inventories are low”.
Industry analysts at the S&P Global report also predict the price of copper to rise this year on low inventories and a bullish demand, albeit at a slower pace.
Mining analysts Cannacord Genuity expects copper prices to average US$7716/t in 2021, which is about a 17% increase on its previous forecast of US$6614/t.
Another analyst, Roskill, predicts copper usage will grow from 4kg per person to 5kg by 2035 due to widespread urbanisation, ongoing electrification globally as well as increased investment in renewable energies including electric vehicles.
Copper, often referred to as “Dr Copper” because it reflects the health of the market, is viewed as being closely connected to macroeconomic events.
Its industry uses include wiring, piping, electric products and manufacturing, building construction, infrastructure, power generation and transportation.
Copper is one of the few metals that does not lose its chemical or physical properties during the recycling process.
It does not burn, melt or release toxic fumes during a fire and it also protects water systems from dangerous bacteria.
In FY20, copper was the second most explored mineral in Australia after gold, with spending on copper exploration drilling coming in at $420.1m, a 27.8% increase from FY19 at $328.8m, according to a GeoScience Australia spokesperson.
Today, South Australia is the leading copper producer along with Queensland and NSW, with smaller quantities coming from WA and Tasmania.
The value of Australia’s exports of copper ore and concentrates and refined copper in FY20 totalled $9.9b.
While more than half of Australia’s copper is exported to China, the nation’s exports account for less than 5% of China’s needs.
Quarterly reports published by the Federal Government’s Office of the Chief Economist show that the main mineral export earners in FY20 included copper at 4%, with iron ore making up the majority at 45% of total mineral export earnings.