BHP Forecasts Significant Copper Demand Growth, Emphasizes Need for New Supply

BHP Sees Trend Reversal In Copper Growth, Warns Recycling Won't Be Enough - BHP Group (NYSE:BHP)

Aging copper mines and complex new projects threaten supply despite recycling potentially covering 40% by 2035. BHP BHP expects global copper demand to grow by around 70% to over 50 million tons annually by 2050. The mining heavyweight released a new study pointing out the issues of the current cycle, including aging deposits and a less healthy pipeline of potential mining projects. The detailed report shows that copper's average annual demand growth was 3.1% over the last 75 years, but it significantly slowed down to 1.9% in the 15 years leading up to 2021. The firm now expects a resurgence and growth of 2.6% through 2035, driven by three categories: traditional economic growth, green energy transition (renewable energy), and digital developments (data centers). Three Pillars Of Demand Emerging markets are also expected to play a role, as improving living standards drives copper demand. China and India, two of the world's most populous nations, provide a strong case for this scenario. For example, despite China's massive copper consumption in the past two decades, its per capita stock of copper is still only half that of developed economies. India's situation is similar, with electricity consumption significantly lower than that of China or Japan, suggesting the potential for a five-fold growth in copper demand in the coming decades. Furthermore, the energy transition will provide additional momentum. Renewable energy sources like wind, solar, and hydro heavily rely on copper, as do electric vehicles (EVs) and their batteries, which need about three times more copper than internal combustion engine vehicles. BHP expects the ongoing energy transition to account for more than 20% of total copper demand by 2040. Copper is also necessary for energy-efficient technologies like smart grids, heat pumps, and LED lighting. As artificial intelligence (AI) technologies and data processing expand, the need for digital infrastructure will be another major contributor to future copper demand. Data centers, which currently consume about 2% of global electricity, are expected to increase their copper demand sixfold by 2050. Digital growth is self-reinforcing, as it also drives energy demands -- and if that energy comes from renewable sources, it requires more copper. Supply Side's Persisting Issues On the supply side, BHP is warning about significant challenges. Existing copper mines are aging, and large-scale greenfield copper prospects like Oak Dam in Australia are few and far between. Meanwhile, new projects -- whether current mine expansions or entirely new developments -- are increasingly complex and expansive. Additional drawbacks include declining ore grades and the need for substantial investment to modernize aging infrastructure. In the next decade, supply will be strained as copper production from existing mines could drop by 15%. BHP expects the market to try to mitigate these challenges through recycling and secondary supply. By their estimates, scrap could account for up to 40% of copper supply by 2035. However, even with increased recycling efforts, the market will still need new mines -- by their estimation, around 10 million tons of new mined supply for the next decade alone. Owing to increasing costs, regulatory hurdles, and technical challenges of working with lower-grade deposits, BHP believes the long-run marginal cost of new projects will likely determine future copper prices. Thus, the industry must develop high-quality brownfield expansions and new greenfield projects to solve these issues. Read next: Freeport-McMoRan Deviates From BHP, Rio Tinto Playbook: CEO Opts To Forgo M&A Benzinga Mining is the bridge between mining companies and retail investors. Reach out to licensing@benzinga.com to get started! Photo via Shutterstock Market News and Data brought to you by Benzinga APIs

BHP expects copper demand to grow by 1 mln metric tons a year until 2035

Sept 30 (Reuters) - Australian miner BHP (BHP.AX), opens new tab expects the world to consume an extra 1 million metric tons of copper per year on average until 2035 due to the adoption of copper-intensive technologies, double the annual volume growth in the past 15 years. Copper has long been used in the construction, transport and power sectors due to its durability, malleability and conductivity. In recent years, it is also used in making electric vehicles, green energy plants, and data centres. Advertisement · Scroll to continue BHP said in a report released on Monday that global copper demand has grown at a 3.1% compound annual growth rate over the last 75 years. But this growth rate has been slowing to only 1.9% over the 15 years to 2021, it said. "Looking to 2035, however, we expect this growth rate to jump back to 2.6% annually," the report said. Total copper demand in 2023 was 31 million tons, including 25 million tons of copper cathode and 6 million tons of copper scrap, according to BHP, which operates and owns most of the world's largest copper mine Escondida. Advertisement · Scroll to continue "As we look towards 2050, we see a 70% surge in global copper demand to 50 million tonnes annually, driven by copper's role in existing and emerging technologies, and in the world's decarbonisation aspirations," said BHP Chief Commercial Officer Rag Udd. The mining giant expects the energy transition sector will account for 23% of copper demand by 2050, from 7% currently, it said in the report. The digital sector, which spans data centres, 5G, artificial intelligence, internet of things and blockchain, will account for 6% of copper demand by 2050, from 1% now, BHP forecast. China's demand will continue to grow, albeit at a lower rate, because its copper usage per capita is only half that of developed countries. India will also see growth, it said. Meanwhile, copper mining output growth is constrained by high costs and depleting ore grade. "We estimate the average grade of copper mines has declined by around 40% since 1991... We expect between one-third and one-half of global copper supply to face grade decline and ageing challenges over the next decade," BHP added. The total bill for all expansion capex from 2025-2034 is seen reaching around $250 billion, a significant increase from the previous 10 years, when the total spend on copper projects was approximately $150 billion, BHP said. Reporting by Mai Nguyen in Hanoi; Editing by Alexander Smith Our Standards: The Thomson Reuters Trust Principles., opens new tab

BHP expects copper demand to grow by 1 million metric tons a year until 2035

(Reuters) - Australian miner BHP expects the world to consume an extra 1 million metric tons of copper per year on average until 2035 due to the adoption of copper-intensive technologies, double the annual volume growth in the past 15 years. Copper has long been used in the construction, transport and power sectors due to its durability, malleability and conductivity. In recent years, it is also used in making electric vehicles, green energy plants, and data centres. BHP said in a report released on Monday that global copper demand has grown at a 3.1% compound annual growth rate over the last 75 years. But this growth rate has been slowing to only 1.9% over the 15 years to 2021, it said. "Looking to 2035, however, we expect this growth rate to jump back to 2.6% annually," the report said. Total copper demand in 2023 was 31 million tons, including 25 million tons of copper cathode and 6 million tons of copper scrap, according to BHP, which operates and owns most of the world's largest copper mine Escondida. "As we look towards 2050, we see a 70% surge in global copper demand to 50 million tonnes annually, driven by copper's role in existing and emerging technologies, and in the world's decarbonisation aspirations," said BHP Chief Commercial Officer Rag Udd. The mining giant expects the energy transition sector will account for 23% of copper demand by 2050, from 7% currently, it said in the report. The digital sector, which spans data centres, 5G, artificial intelligence, internet of things and blockchain, will account for 6% of copper demand by 2050, from 1% now, BHP forecast. China's demand will continue to grow, albeit at a lower rate, because its copper usage per capita is only half that of developed countries. India will also see growth, it said. Meanwhile, copper mining output growth is constrained by high costs and depleting ore grade. "We estimate the average grade of copper mines has declined by around 40% since 1991... We expect between one-third and one-half of global copper supply to face grade decline and ageing challenges over the next decade," BHP added. The total bill for all expansion capex from 2025-2034 is seen reaching around $250 billion, a significant increase from the previous 10 years, when the total spend on copper projects was approximately $150 billion, BHP said. (Reporting by Mai Nguyen in Hanoi; Editing by Alexander Smith)