The world's largest copper mining Escondida, producing 1.2348 million tons of copper in 2018

Since the beginning of December, international copper prices have risen sharply, from US $5800/ton at the beginning of the month to nearly US $6200/ton today. This has become long-lost good news for the copper industry chain that has been in the doldrums for more than half a year. With the recovery of global demand, copper prices are likely to continue to "take off", and copper mines are likely to become one of the most popular minerals in 2020.

Since the Sino-US trade friction, due to increased uncertainty, the growth of demand for mineral products has slowed down from a global perspective. In the final analysis, it is actually the global concern about China's demand. After all, China consumed 49% of the world's steel, 53% of copper and 56% of aluminum in 2018. China's demand largely determines the quality of the mineral product market. However, from the current situation, China's demand for copper will continue to be bullish. Although the growth rate will slow down, the growth rate of demand in countries such as India and ASEAN will rise sharply. Overall, the global demand for copper will maintain steady growth in the next 10 to 20 years.

Global copper demand trends, 1980-2040

In addition, new energy vehicles will become a major growth point of copper demand. Since 2015, the global new energy vehicle industry has developed rapidly, and the output of new energy vehicles has increased from 540000 in 2015 to 2.01 million in 2018. Especially in China, new energy vehicles with electric vehicles as the absolute main force have been seen everywhere.

new energy vehicle

According to data from Copper Development Association Inc, copper consumption data for various types of vehicles are as follows:

Ordinary gasoline car: 18-49 pounds (8-22kg) copper;

Hybrid electric vehicle (HEV):85 pounds (38kg) of copper;

Plug-in hybrid electric vehicle (PHEV):132 pounds (60kg) of copper;

Pure electric vehicles (BEV):183 pounds (83kg) of copper;

Hybrid bus: 196 pounds (88 kilograms) of copper;

Pure electric bus: 814 pounds (369 kilograms) of copper;

Although it is difficult to determine where new energy vehicles will go in the future, at least in the short and medium term, the output of electric vehicles will continue to grow. Also don't forget the increasing density of the charging pile demand for copper is also very impressive!

Although the proportion of copper investment in the global exploration market is still very high, the discovery rate of large copper mines in recent years is not optimistic, and it is almost rare to hear the news of the discovery of large copper mines. Based on the 2018 reserve-to-production ratio, copper can only be in the basic full demand gear, and with the increase in mining depth and the decrease in average grade, the future supply is hardly optimistic.

Global reserve-to-production ratio of 30 minerals in 2018

Copper is one of the minerals with the most obvious separation between supply and demand. Although the demand is mainly in China, six of the world's top ten copper-producing mines are located in Peru and Chile. South America is the world's largest copper supply base. However, the current mining development environment in South America is very worrying. Due to community relations and environmental protection and other factors, the news of the world-class large-scale copper mine strike has hardly stopped in the past two years. The general strike and street demonstrations have put the local government in a dilemma. So far, the fundamental problem has not been effectively resolved, so the future production of copper mines in South America has cast a shadow.

The "Global Mining Development Report 2019" was officially released on October 10 this year, when copper prices were at a low point. The report pointed out that copper prices have shown a trend of rising first and then falling since 2016. In the future, the development of new energy vehicles will drive some copper demand and support the rise of copper prices. Copper prices are expected to gradually move into a new price platform in 2020-2021 as demand increases.

Changes in copper prices over the past year

As predicted in the report, the current copper price has shown a good recovery trend, and the world's top investment institutions have also turned their attention to copper, and are very optimistic about the copper price trend in the future.The North American Investment Opportunities and News website summarizes the views of each:

Jefferies

LaFemina wrote that the company is most bullish on copper miners in 2020, as current supply will not be able to meet "even a modest cyclical demand recovery". Freeport McMoran, First Quantum and Glencore are all expected to benefit from a recovery in copper prices. Freeport and First Quantum are his top picks. Select iron ore companies such as Anglo American, Vale and Rio Tinto are also expected to outperform the market as prices are expected to remain high. The company is the most conservative bullish on gold.

Goldman Sachs

According to Goldman Sachs' commodities team, "copper is our most bullish metal" in 2020 ". China's copper demand has been limited this year by "poor performance in the power grid, real estate and transportation sectors", but this may change before 2020. Goldman Sachs expects strong growth in completions over the next two years, the real estate sector will continue the positive trend it has seen since August, and grid investment is likely to grow strongly in the first quarter of 2020 due to government infrastructure stimulus. At the same time, the "strategic position of gold" is still very consolidated.

Citi

Citi is most bullish on alumina, copper and coking coal next year, bearish on zinc and iron ore. The bank believes that commodities will benefit from moderate global growth, with most of the improvement coming from emerging markets and bullish on gold in the medium term. Citi's equity analysts recently upgraded Tektronix Resources Ltd. to buy because of the improved outlook and valuation of coking coal.

Morgan Stanley

Morgan Stanley's commodities team expects demand to grow moderately in 2020 due to a "mini-cycle recovery" through the end of the year. Damo analysts are bullish on North America's mining industry, especially copper, and individual stocks are bullish on Freeport McMoran and Tektronix Resources. Analysts are bearish on the outlook for aluminum and alumina, but still see upside for Alcoa in 2020. Damo's most bullish commodities are cobalt and copper, not iron ore, lithium and zinc.

Bank of America

Cyclical raw materials are expected to benefit from a potential inventory replenishment cycle in 2020, and the Fed's easing policy and the current phase of the U. S.-China trade deal will provide an attractive inflation hedge. Bank of America believes that copper and nickel prices may rebound in 2020, while the outlook for gold and precious metals is more cautious.

Top mining companies focus on the layout of copper assets is the mining industry "open secret", almost all of the top mining companies are fond of copper mines. We are familiar with BHP Billiton, Rio Tinto, Vale, Glencore and so on to copper as one of their core business. Guess who is behind the world's largest copper Escondida? They are BHP Billiton, Rio Tinto, Mitsubishi and Nippon Mining Metals.

The sneakers

China's large mining companies are also actively layout of copper assets, especially in overseas, has made certain achievements. Minmetals won Las bambas, one of the world's top ten copper mine projects. Zijin bet on the Kamoa-Kakula of one of the world's largest undeveloped copper mine projects. Luo Mo successfully held the world's largest copper and cobalt mine project at the right time.Tenke Fungurume,Aluminum inToromo-cho copper mines in PeruThe project is also in the midst of an orderly expansion......

From a comprehensive point of view, the good days of copper mines are really coming!

* This article only represents the author's personal views and does not constitute any investment advice!