The copper market will start to enter a “substantial” supply deficit from 2021, pushing prices of the industrial metal higher, the head of Chile’s national mining association Sonami said on Monday.
“In the near term, mining companies are not investing in additional capacity and copper demand is growing at a pace of around 2 percent a year,” Sonami Chairman Diego Hernandez told the Copper 2016 industry conference in Kobe, Japan.
Supply growth will likely begin to fall from around 2019 and the market will face a substantial deficit from around 2021 as it coincides with a recovery in demand growth, driven by population growth and urbanization in China and other emerging countries, and less fossil fuel use amid climate change, Hernandez said.
Renewable energy systems such as solar and wind power on average require eight to 12 times more copper per kilowatt than traditional generation, he said.
To encourage new mining projects, miners need a long-term copper price outlook of about $5,700 to 6,600 a ton, Hernandez who is former chief executive at Antofagasta, told reporters later on the sideline of the conference.
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