China copper smelters bracing for shortage of vital scrap metal
Around 30% of China’s refined copper production used scrap metal as a feedstock in 2023.
Southern Copper’s (NYSE:SCCO) nearly finished US$900 million expansion of Toquepala mine and the imminent approval of its halted US$1bn Tia Maria project, are the two main cards Peru has up its sleeve to reclaim its place as the world’s second largest copper producer this year.
According to the country’s Minister of Energy and Mines (MEM), the start up of both mines is the last push Peru needs to take over China as the world’s No. 2 producer of the red metal, a title the South American nation lost in 2012.
Toquepala Mine, aerial. Image courtesy of the International Space Station.
Currently China’s output stands at about 1.6 million tonnes per year, well below the nearly 5.8 million annual tonnes produced by Chile, the world’s leader, based on data provided by CRU Consulting and quoted by Andina news agency (in Spanish).
Tia Maria has been suspended since 2011, as it faces opposition from nearby communities concerned about the use of water. But the company held a public hearing for the project late last year, after which it said it was submitting a revised environmental impact study, which it expected to be approved by June 2014. According to Southern, that would allow the US-based company to start production at Tia Maria in about two years.
Peru’s government is also counting on Chinalco’s (HKG: 3668) US$3.5bn Toromocho copper mine, which began production in December, as well as the recently acquired Las Bambas massive copper mine to up the country’s output of the red metal from 1.3 million tonnes last year to 2.8 million tonnes before 2016.
South America’s sixth-largest economy expanded 5.6% last year, the slowest pace since 2009, as slowing Chinese demand triggered a slump in copper shipments that account for a quarter of Peru’s exports. Copper prices have fallen 11% this year, adding to a 7.2% drop in 2013. Gold, Peru’s second-largest export, has risen 9.8% so far this year.
