It comes as no surprise copper production declined in 2020 as the world grappled with a global pandemic, particularly in the second and third quarters. As we begin to take steps out of lockdown and vaccination rates increase globally, there has been a slight uptick in production. With another six projects due to move into production within the next two years, production will likely increase further. But will this be enough to offset surging copper demand?
Demand for electric vehicles ("EVs") and appliances will continue in the coming years as more nations focus on the green economy and reducing carbon emissions. This is forecast to lead to surging demand in a suite of metals, but particularly copper.
Industry expert, Wood Mackenzie, estimates EVs demand up to 3.5 times more copper than a similar internal combustion engine ("ICE") car. And the disparity increases with larger vehicles. For example, a fully electric bus may use 11 to 16 times more copper than its ICE counterpart.
Despite the additional production, there is still likely to be a supply gap in the second half of this decade as companies struggle to move projects to production quickly enough.
It takes on average 15-20 years to move a project from discovery through to production - and with only 16 discoveries made in the past decade, there is real concern around demand being met. Of all those 16 discoveries, it's no guarantee they will all make it to the production stage because of several factors, ranging from low grades to complex logistics or geographical location to potential regulatory obstacles.
So, it's refreshing to see a company being in a position to move quickly - especially in the context of a global pandemic. Moving quickly into production has been a strong driver for Marimaca Copper, which has made the only significant copper discovery in the world since 2015.
In the past year alone, the company has moved through technical de-risking milestones, the preliminary economic assessment, and exploring additional targets next to its flagship asset in Northern Chile. As Marimaca moves into the permitting process, the company is on schedule to begin construction in 2022.
There are painfully few other projects successfully navigating their way through the processes to narrow the future supply gap. Only time will tell how successful the mining industry will be.