Friedland’s bullish forecast
Robert Friedland, founder of Ivanhoe Mines, predicts a surge in copper prices, forecasting it to reach $9,500 per tonne in the short term, attributing this bullish outlook to lower interest rates and increased demand from China. Despite concerns about China’s real estate market, Friedland argues that the country has not slowed copper consumption, setting a record in 2023 with 27.54 million tons imported.
Global real estate and Chinese influence
The global real estate sector, with a spotlight on China, significantly impacts copper prices. Around a quarter of the world’s copper is consumed by the building and construction industry with a further 13% consumed by the refrigerators and air conditioning industry, whose fortunes track that of the real estate sector. Chinese demand, constituting 30% of the total, is pivotal. China’s real estate sector witnessed a record 1.8 billion square meters of new residential properties in 2021, but the figure plummeted to 699 million square meters from January to October 2023. The sector’s recovery depends on policy decisions from China’s central bank.
Energy transition propelling copper demand
Copper’s integral role in the energy transition gains momentum, with McKinsey forecasting that demand from power generation, electric vehicles (EVs), and electronic devices could result in a copper supply deficit of 6.5 million MT by 2031. The surge in demand from EV production, renewable energy generation, and global climate goals reshapes the copper landscape.
Shift towards copper deficits in 2024
A shift towards supply deficits is expected by late 2024. Production shortfalls, notably the shutdown of First Quantum Minerals’ Cobre Panama mine and production cuts by Anglo American, contribute to this outlook. The closure of Cobre Panama alone wiped out about 350,000 MT of the world’s annual copper production.
Challenges for new copper production
Meeting the gaps left by major producers presents challenges for new copper output. In 2024, only a handful of noteworthy projects, including Teck Resources’ Quebrada Blanca expansion in Chile, are slated to come online. The economic backdrop may limit demand in the first half of the year, underscoring the need for substantial rises in copper prices.
Cost challenges and capital cycles
Copper companies grapple with cost challenges in initiating operations, with mining capital expenditures reduced by 55-60% since the peak in 2012. Capital difficulties may persist, affecting producers crucial for expansion and development plans. Substantial rises in copper prices are crucial to overcoming hurdles in the current capital cycle.
2024 price forecasts and market balance
Analysts predict a finely balanced market in 2024, with prices susceptible to broader swings based on significant news affecting the market. A Reuters poll of 28 analysts suggests a 2024 forecast of $8,625 for the London Metal Exchange cash copper contract. While uncertainties prevail, the improving economic picture hints at a stronger end to the year.
Idaho Copper’s strategic position amid trends
Amidst these copper market dynamics, attention turns to Idaho Copper, a US-based copper exploration company. Positioned strategically within the evolving copper landscape, Idaho Copper is poised to leverage the current trends.
The exploration company stands to benefit from the increasing demand for copper in the US, driven by infrastructure development and the accelerating shift towards renewable energy. As the energy transition gains momentum, Idaho Copper‘s exploration efforts align with the broader industry’s push for sustainable practices and resource development.
The US, with its focus on domestic production and reducing reliance on foreign sources, positions Idaho Copper at the forefront of meeting the country’s growing copper needs. As global supply challenges persist, the strategic importance of local exploration and production becomes even more pronounced.
The Idaho Copper project has been described as one of the largest undeveloped copper projects in the Americas, hence its importance in the US as a strategic asset. Measured and Indicated Resources include almost 4 billion pounds of copper, 1.6 billion pounds of molybdenum, and 180 million ounces of silver, with almost double these amounts categorized as Inferred Resources. The company is targeting a revised PEA by mid-2024 which is likely to reveal the project’s enhanced value from its previously estimated $356 million net present value over a 30-year life of mine.
In conclusion, the copper market in 2024 navigates a complex terrain, influenced by global demand, supply disruptions, and the transformative energy transition. While challenges loom, opportunities emerge for companies like Idaho Copper, strategically positioned to contribute to the evolving copper narrative in the United States and beyond. As the industry adapts to shifts, the role of exploration companies gains significance, shaping the trajectory of copper prices and the market’s response to key developments in the years ahead.