SMM 2017 Copper & Aluminum Summit: Capacity Utilization Reduces with Falling Copper Ore Grade, and ICSG Expects No Output Growth in 2017

SHANGHAI, Mar. 28 (SMM) - International Copper Study Group (ICSG) Head of Environment and Economics Carlos Risopatron predicted global copper concentrate supply in 2017 and mine development on SMM 2017 Copper & Aluminum Summit on March 24.

Collections of Stories in Base Metal Market at SMM 2017 Copper&Aluminum Summit

Impurity of copper concentrate rises and accidents and risks resulted by tailings increase.

Carlos Risopatron indicated that copper consumption and rising impurity will reduce copper concentrate grade.

With the aging of copper mine, which is irreplaceable by new one, copper ore grade continues falling. Energy consumption and solid waste increased due to rising impurities, growing capacities and costs at mines.

Copper tailings rose continually in the past 25 years, increasing risks and accidents. This has occurred in Canada that heavy metals from waste residues flew into water. This will affect copper mine development and copper ore supply.

The growth of impurities in copper ore is higher than expected and those are higher during copper anode and crude copper production. There are more and more by-products need to be recycled at copper smelters.

Capacity utilization at copper mine is slackening.

Enterprises mainly invest in downstream of copper industry in China and most copper concentrate and extracting-smelting capacities are at abroad.

Copper oxide mining areas outside of copper ore belt in Africa are exhausting and copper mine in Congo has been closed down while SX-EW (solvent extraction and electrowinning) copper supply is insufficient, even in Africa. Copper concentrate supply has reached peak two years ago and SX-EW copper output is declining at present. Falling growth of newly SX-EW copper output means that proportion of copper concentrate capacity will increase in global ore capacity in 2020.

Capacity growth at mines is higher than that of output. As new capacity release is not that smooth, capacity utilization is slowing down actually.

Besides, copper concentrate inventory is low in recent years due to large consumption.

Import&export of copper concentrate rises due largely to falling copper content.

Rising impurity in copper concentrate is not only a problem in China but also a problem all over the world.

Import&export of copper concentrate continues increasing, but this doesn’t mean that copper output is rising. It needs to export more copper concentrate to satisfy copper supply with growing impurities.

China’s export of copper concentrate accounted for 45% of global import in 2015 and reached 50% in 2016. Impurity of imported copper concentrate is high from following copper content and impurity content charts. This not only occurs in China but also happens in EU, Japan and India.

How copper concentrate from Chinese enterprises develop at abroad?

China’s overseas copper concentrate output was 1.5 million tonnes in 2016 and will reach 2.5 million tonnes in 2020. But mines will face more difficulties.

Carlos Risopatron expects that global newly copper ore capacity will be mainly from China, Zambia and Iran in 2016-2020. More countries will increase capacity after 2020, such as Indonesia and Mongolia.

Output Outlook

Global copper ore output rose 4% in 2016 and will this continue?

New copper mines, expecting to put production lines into operating in 2015-2019, already started operation in 2015-2016. As copper price dropped in 2013-2016, mines postponed capital expenditure in 2015-2016 and reduced debt further in 2017, impeding copper mine expansion in 2017-2019.

It is learned that no newly copper mine or expansion will see in 2017. If copper price stabilizes in 2017-2019, copper mines may postpone projects initiate or cancel them. Most projects with output at 50,000 tonnes per year were postponed in 2016 and output at new copper mine will decline gradually in 2017-2024.

Besides, as copper concentrate grade will drop, mines will cost more in smelting copper cathode. ICSG expects copper ore capacity expansion to miss market expectation, and no newly copper ore will see in 2017 with total copper concentrate output at 16 million tonnes and SX-EW copper output down 6%.

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