Column: Electric dreams turn into a nightmare for battery metals
A sector that was once racing to build new supply has been closing mines and deferring projects as low prices bite into the cost curve.
The copper market may swing to a deficit by the end of the decade as the energy transition accelerates and the metal becomes harder to dig up, according to the world’s top miner.
Although there are enough reserves of copper, and other metals like nickel and lithium central to decarbonization, the risk is there will be “a mismatch between the timing of increase in demand and when supply meets that demand,” Mike Henry, chief executive officer of BHP Group Ltd., said at a Financial Times mining conference in London on Friday.
Henry’s comments come after a torrid few months for copper, a barometer of economic activity because of its varied applications from construction to electricity transmission. While miners and banks are almost uniformly bullish on the metal’s long-term prospects because of its role in clean energy, prices have dropped by about 30% from the record high hit in March as growth has faltered in the face of rising interest rates.
Henry said the market will be in “a little bit oversupply” in the next few years, before tightening up toward the end of the decade as more easily accessible, richer seams of the metal become difficult to find and mining becomes more complicated.
“There are more issues that need to be addressed in terms of water management, community engagement, broader environmental permitting,” he said. “These things are taking longer. They are more complex.”
On Thursday at the conference, Kosta Bintas, co-head of metals and minerals trading at Trafigura Group, said the energy transition and tight supplies will drive a rebound in copper prices, with stockpiles set to shrink to less than three days of global consumption at the end of the year.
Richard Adkerson, chief executive officer of miner Freeport-McMoRan Inc. said that copper prices don’t reflect a “strikingly tight” physical market.
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