The global copper market is witnessing a three-way battle for the title of the world’s biggest copper producer. The contenders: BHP Group, Codelco, and Freeport-McMoRan Inc.
Chilean major and global leading copper producer, Codelco, has been struggling with output goals as it battles against ageing operations, according to Bloomberg. Currently, South America dominates copper production, with Chile being the largest mined producer.
However, increasing output has proved challenging for miners, leading to a wave of industry deal-making and investments, in an attempt to address potential supply shortfalls over the next decade.
In May, BHP Group acquired Australia’s OZ Minerals Ltd., making them a strong contender for top spot as it resulted in the company producing more copper than Codelco in the last quarter.
Bloomberg Intelligence analyst, Grant Sporre told Bloomberg, “The risk is if Codelco doesn’t pick up production in 2024 and BHP does, then they could overtake the mighty Codelco” in annual terms.
Freeport-McMoRan Inc. briefly held the top spot last year as it expanded its underground mining in Indonesia but did not hold onto it going into 2023. Sporre predicts that Freeport-McMoRan Inc. will be in third place in the coming years, with Codelco barely keeping the top position against BHP.
Codelco’s outgoing CEO, Andre Sougarret, showcased numbers consistent with Bloomberg’s forecasts at a presentation in mid-August. Nonetheless, Codelco has been missing targets for years due to project delays and lower-quality ore.
Analysts told the Wall Street Journal that they predict copper demand to surge in the near future, with green uses and the energy transition putting increased pressure on the competition between the three mega-companies.
Green uses of copper accounted for 4% of market consumption in 2020 and is expected to more than quadruple to 17% by 2030, according to Goldman Sachs analyst, Aditi Rai for the Wall Street Journal. He added that a “net-zero emissions” path would mean the world would need an additional 54% of copper by 2030 on top of previously forecasted demand.
It remains to be seen who will emerge as the winner in copper production supremacy amidst the growing need for the red metal, however, the current Chilean crown is at serious risk of being clinched by its competitors if Coldelco does not improve output.
