Copper
Feature Articles
Copper Concentrate Trade Flows
August 2021
Global copper reserves are estimated at 870Mt of contained copper, according to the USGS. Chile has the largest copper reserves, accounting of 23% of the world’s total (200Mt). Peru is tied with Australia for second place, with reserves of 87Mt (10% of the total). Other countries with sizeable reserves include Russian (61Mt), the US (51Mt) and Indonesia (28Mt).

Home to the largest estimated reserves of copper, South America has continued to dominate copper concentrate supply. In the past decade, Chile, Peru and China sustained as the top three producer countries of copper concentrate, making up an average of 48% of global copper in concentrate supply in 2011-2020 at proportions of 25%, 12% and 11%, respectively. Other major producing countries include Russia (produced 5.3% of the total in 2020), Australia (5.2%), and the US (4.3%). In the short-to-medium term, the geographical profile of copper concentrate supply will look similar to that of today.  

 

 

Chile

Geographically, Chile owns largest copper reserves. It is also the world’s biggest copper concentrate producer and exporter. Chile’s economy relies heavily on exports of copper and the state-owned firm CODELCO, which is the world’s largest copper producer.

Global exports of copper concentrate and partially processed ore by countries totalled 35.32Mt in 2020, out of which 36.2% of worldwide copper ore and concentrate exports came from Chile, followed by Peru (17.4%), Mexico (5.1%) and Australia (5.1%). Mongolia was the source of 3.7% of the global total, ahead of 3.6% of copper ore and concentrate exported from Indonesia. 

Chile produces approximately 25% of the world’s copper concentrate. Chile’s shipment of the copper ore and concentrate totalled at 12.77Mt in 2020, down by 2.6% year on year. The largest destination for Chilean copper exports was Asia. Chilean copper exports to Asia amounted to 11.49Mt (90% of the total export) in 2020, out of which 7.84Mt (61.4%) were destinated to China. Japan was the second leading destination of Chilean copper that year, with 2.28Mt (17.9%), followed by South Korea (812kt, 6.4%) and India (387kt, 3.0%).

 

 

China

As the centre of primary smelters, China has experienced fast growth in copper smelting capacity for more than ten years, with its primary smelting capacity expanded at a CAGR of 4% to 9.05Mtpa by 2020, from 5.65Mt in 2008. Meanwhile, China has been struggling to meet its increasing demand for copper concentrate from domestic resources.

Miners in China have been facing challenges such as declining copper grades and deeper mining conditions. This has led to copper producers in China to increasing look to the seaborne market to import copper concentrate or partially processed copper ore. Its copper concentrate self-sufficiency rate almost halved in the past decades to 22.8% in 2020.

In the past ten years, China’s copper concentrate and ore imports grew at a CAGR of 12.9% to 21.77Mt in 2020. Over one third (35.5%) of China’s 2020 imports came from Chile, followed by Peru (22.1%), Mexico (8.0%) and Mongolia (6.0%).

Looking to secure upstream resources, Chinese companies have been active in merge and acquisition of high-quality copper resources around world. China-controlled Las Bambas and Toromocho mines in Peru deliver approximately 600ktpa of copper in concentrate to China. In the DRC, all the copper from the recently-launched giant Kamoa-Kakula mine will be destinated for China.

The mine has signed off-take agreements with China’s Zijin Mining and CITIC Metal, for 50% each of the copper products from Kamoa-Kakula’s 200ktpa phase one production. Meanwhile, Zijin also rapidly advances its Čukaru Peki Mine in Serbia. The Čukaru Peki’s Upper Zone is designed to produce 91ktpa of copper. Zijin plans to complete the trial production stage before September this year. 

 

 

Australia

Arrivals of copper concentrate and ore from Australia into China have reduced to zero since December last year, as a trade dispute slams China’s demand for Australian supply of the commodity. Although copper concentrate imported from Australia only accounted for about 5% of China's total imports, from Australia's point of view, China was the country's number one buyer of copper concentrate. China's copper concentrate accounted for more than 50% of its total exports.

Total exports of Australian concentrates fell 7.9%% in 2020 to 1.79Mt as producers scrambled to find new customers in the final months of 2020. In the first five month of 2021, Australia exported a total of 711kt copper concentrate and ore, only 0.1% lower than the same period of 2020. It appears other Asian countries jumped to pick up China’s slack. Australia’s concentrate exports to South Korean surged by 332.2% to 153kt in the first five months and exports to India jumped 287.0% to 37kt. 

 

 

Export Bans

In Indonesia, a combination of policies ranging from investment incentives for metal refiners to outright bans on the export of unprocessed ores will be implemented in order to direct investment into higher value-added mineral activities and away from exporting raw minerals.

Indonesia planned to bring forward the full ban of nickel ore to January 2022, however events around the pandemic have seen this pushed back to June 2023. Copper is also expected to eventually face restrictions on exports of unprocessed ore to encourage smelting. Freeport Indonesia has promised to build a new smelter near its existing copper smelting and refining operations in Gresik, East Java, which will have a processing capacity of 1.7Mtpa of copper concentrate.

In the DRC, the government has once again banned exports of copper and cobalt concentrates this year but will allow mining companies that hold waivers to continue with shipments. The DRC attempted to introduce similar bans in 2007, 2010 and 2013 in order to strengthen the country's domestic smelting and refining operations.

However, insufficient smelting capacity forced the government to reverse the decisions. In August last year, the mining ministry granted an indefinite moratorium for all minerals exports, except copper concentrate. The ban ended in April 2021 and has now been replaced with waivers that will be issued on a case-by-case basis, which require the affected companies to submit applications.