Trade war risks copper investments needed to meet future demand

The copper industry is turning attention to how the escalating trade war between the world’s biggest economies will affect investments needed to meet future demand for the wiring metal.

US President Donald Trump’s efforts to re-balance global trade — including a 145% tariff on Chinese imports — and retaliation by Beijing are dimming the outlook for global growth, with credit costs on the rise amid wide bond-market swings. That’s a toxic combination for those tasked with multibillion-dollar decisions on expanding copper supplies.

Although such projects are based on long-term supply-and-demand forecasts, miners and their financiers are gun-shy after getting burned in previous busts.

“Investors, especially in mining, need more certainty, especially with long-term investments,” Antofagasta Plc chief executive officer Ivan Arriagada said during the CESCO Week mining event in Santiago this week. “Therefore, this could reduce investments or delay some decisions.”

Less investment is the last thing the industry needs — assuming the trade war doesn’t have a significant impact on copper demand and the electrification trend helping to underpin it.

Additional demand from the energy transition, power-grid overhauls and an expected US data center boom, means the industry needs to churn out 7.5 million metric tons of copper over the next 10 years from projects that haven’t been sanctioned yet, according to CRU Group estimates.

The industry’s response at this week’s gathering was to stress the importance of collaboration, adopting newer technology, and spinning off or outsourcing ancillary work related to water and energy.

(By James Attwood)