Macroeconomic factors coupled with weaker-than-expected demand impacted the copper market in 2022, a year in which the red metal experienced high volatility.
How supply and demand dynamics will play out this year is yet to be determined, but more copper will be needed in the long term to meet the growing demand of the green energy transition.
What big copper projects should investors watch in 2023?
According to the International Copper Study Group, the production of copper mines is is expected to increase by 3 percent in 2023, below the group’s 5 percent growth projection last October. According to the organization, this decrease is due to “operational and geotechnical problems, equipment failures, adverse weather, landslides, revised company guidance in some countries, and community actions in Peru.”
Even with this list of mitigating factors, global copper production is still expected to be positive thanks to additional production from new mines and expansions and increases at existing mines. These are mainly expected in the Democratic Republic of the Congo (DRC), Peru and Chile.
“In addition, production in several countries will recover as production in early 2022 remained restricted as a result of COVID-19 related issues,” the group explains in a report.
Chile is the world’s largest copper producer, with 5.2 million metric tons (MT) of copper in 2022, while Peru and the Democratic Republic of Congo were a joint second with 2.2 million MT each.
Commenting on which projects it will be eyeing in 2023, Refinitiv’s Karen Norton said Quebrada Blanca Phase II in Chile and the Kisanfu project in the Democratic Republic of Congo are two of the assets it is eyeing.
Read on to see those assets, as well as three other copper deals that experts think investors should watch out for in 2023. The projects are listed in alphabetical order.
1. Kamoa-Kakula
Ivanhoe Mines (TSX:IVN,OTCQX:IVPAF), in a joint venture with Zijin Mining Group (OTC Pink:ZIJMF,HKEX:2899), Crystal River Global and the DRC government, operates the Kamoa-Kakula copper project in the African country. Phase 1 of the project can produce 200,000 MT of copper each year, and a Phase 2 concentrator came online months ahead of schedule in April 2022.
After reaching a total copper production of 333,500 MT in 2022, reaching the upper limit of its guidance, this year’s production is is expected to achieve between 390,000 and 430,000 MT of copper in concentrate.
according to a study of pre-feasibility For its upcoming Phase 3 and Phase 4 expansions, the company anticipates average annual production of 654,000 MT of contained copper in concentrate from 2025 to 2029.
Ivanhoe signed copper concentrate purchase agreements from the project with CITIC Metal and Gold Mountains International, a subsidiary of Zijin Mining, for 50 percent each of the copper products from Kamoa-Kakula Phase 1 production.
2.KFM
KFM, formerly called Kisanfu, is located about 33 kilometers from Tenke Fungurume, one of the largest copper and cobalt mines in the DRC. In 2020, CMOC (OTC Pink:CMCLF,HKEX:3993) bought the project from US-based Freeport-McMoRan (NYSE:FCX) for $550 million.
The company expects start production at the project by the end of the second quarter of 2023. Once full production is achieved, the asset is expected to produce an average of 90,000 MT of metallic copper and 30,000 MT of metallic cobalt per year.
During the first quarter of 2023, KFM output achieved of 4,375 MT of copper and 102 MT of cobalt.
3. Quebrada Blanca Phase 2
With an initial mine life of 28 years, Teck Resources’ (TSX:TECK.A,TSX:TECK.B,NYSE:TECK) Quebrada Blanca Phase 2 project in northern Chile produced its first copper concentrate at bulk at the end of March. The Vancouver-based company expects to advance commissioning and ramp up full production through 2023.
Teck has invested more than US$5 billion in the project, which is expected to produce around 285,000 to 315,000 MT of copper per year between 2024 and 2026. When full production is achieved, production from Quebrada Blanca is expected to Phase 2 double Teck’s copper production on a consolidated basis.
The company listed on the TSX has raised the costs for the project once again, saying its capital cost guidance could rise to $8bn to $8.2bn.
4. Oyu Tolgoi
Known as one of the world’s largest copper and gold deposits, Oyu Tolgoi is located in the South Gobi region of Mongolia and is operated by Rio Tinto (ASX:RIO,LSE:RIO,NYSE:RIO). Rio Tinto owns a 66 percent stake in the asset and the Mongolian government owns the remaining stake.
Oyu Tolgoi’s first ore was mined in the open pit in April 2012, but more than 80 percent of the mine’s total value is underground, where production started in March 2023. Rio Tinto expects Oyu Tolgoi to be the fourth largest copper mine in the world once the underground mine is fully operational. At peak production, the asset is forecast to produce 500,000 MT of copper per year.
5.Udokan
With more than 26 million MT of mineral resources, the Udokan copper project is the largest undeveloped copper deposit in Russia and one of the largest in the world. The first stage of the project plant will deliver up to 135,000 MT of copper per year, with processing capacity set at 15 million MT.
Established in 2008 to develop its namesake deposit, Udokan Copper is part of diversified Russian holding company USM, founded by billionaire Alisher Usmanov. The businessman was sanctioned in March 2022 after Russia’s invasion of Ukraine.
This is an updated version of an article first published by the Investing News Network in 2023.
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Securities Disclosure: I, Priscila Barrera, do not currently have any direct investment interest in any of the companies mentioned in this article.
Editorial Disclosure: Investing News Network does not guarantee the accuracy or completeness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the views of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.