The number of significant copper deposit discoveries is steadily declining, according to a study by S&P that takes into account all 239 deposits explored since 1990, with total reserves of at least 500,000 tons. Only four discoveries were registered between 2019 and 2023, with total reserves of 4.2 mn tons, which highlights the trend of decreasing pace and size of large-scale copper deposit discoveries over the past decade.
The average copper grade at mines has decreased by about 40% since 1991, BHP notes. In the next decade, between a third and a half of the global copper supply is expected to suffer from declining copper grades and depleting natural resources.
It takes longer to develop new assets, and the average time from discovery to production increased to 17.9 years from 2020 to 2023, compared to 12.7 years for mines commissioned from 2005 to 2009. The difficulties of obtaining approvals by regulators and communities for the development of new deposits should be added.
Naturally, the largest mining companies focus mainly on brownfields, and their largest projects relate to the development of license areas or the upgrading of facilities. Budgets for the exploration of new deposits remain significantly below the levels of a decade ago (in dollar terms), despite a high price for copper.
All these factors make it increasingly difficult to fill a significant gap in refined copper supplies that is expected from 2027, according to S&P. Peak copper supplies from mines are expected in 2029, and the potential concentrate deficit is projected to be 2.2 mn tons by 2032. BHP forecasts the global copper demand to increase by 70% by 2050 and reach 50 mn tons per year, and $250 bn in investment will be required to close the growing gap between supply and demand.
Latin America is expected to remain a key region for both existing production and potential projects.
Source: BHP Results for the half year ended 31 Dec 2024 Presentation
Rio Tinto
Rio Tinto, the world’s largest iron ore producer currently generating up to 70% of its revenue thanks to iron ore is reducing its dependence on this raw material, primarily developing its copper segment, counting on its importance in the global energy transition. Rio has the highest production growth rate among its competitors, over 30% from 2024 to 2028, which compares favorably with BHP’s expectations (18% to 20%) and Glencore’s ones (15% to18%) for a comparable period.
In 2024, Rio’s copper segment revenue increased by 75%, to $ 3.4 bn, with the copper price increasing by 8% over the year. The share of the copper business in the cash flow for the year increased to 16% in the second half of 2024 from 3% in 2023.
Copper production rose by 13% last year, driven by Mongolia’s Oyu Tolgoi (Rio’s stake is 66%) reaching full capacity and Escondida’s strong performance (Rio’s stake is 30%). Oyu Tolgoi with its average copper grade of 1.66% (copper equivalent), which is well above the average (0.6%), is key to solve the problem. Oyu Tolgoi underground mine was put into operation in March 2023 and it is expected to produce enough copper for the manufacture of over 6 mn electric vehicles when it is fully operational. After growing by 28% in 2024, the copper output at Mongolia’s mine is set to rise by 50% in 2025, and reach 500,000 tons annually from 2028 to 2036, making Oyu Tolgoi the world’s fourth-largest copper mine by volume.
Another operating asset, the Kennecott copper mine (Utah, USA, a 120-year-old deposit), is expected to produce additional 250,000 tons of copper annually over a decade after completing the construction of the underground mine and reconstructing its infrastructure in 2025.
In total, Rio will produce 780,000 to 850,000 tons of copper in 2025 compared to about 700,000 tons in 2024. By 2033, Rio’s plans are to reach its annual production of 1 mn tons with a 3% average annual production growth rate.
Rio has two development projects in the copper industry: Resolution (USA) and Winu (Western Australia).
The Resolution project involves the construction of an underground mine in the Copper Triangle in Arizona within a decade at a deposit with an average copper grade of 1.5%. The project able to supply up to 25% of the USA’s copper demand is awaiting final approval by the US Forest Service (USFS) and is currently facing opposition from local aboriginal tribes. Rio controls 55% of the Resolution project, while BHP owns 45%, and the parties have already spent $2 bn on preparations for the deposit development and obtaining permits.
The Winu copper-gold project located near Rio’s copper assets in the Pilbara region was discovered in 2017. The latest estimate of its total mineral resources is 608 mn tons, with a 0.49% copper grade (copper equivalent). This year, a prefeasibility study is expected to be completed that involves the development of deposits to process 10 mn tons of ore per year. Rio attracted Sumitomo Metal Mining to participate in the project, selling a 30% stake for $399 mn.
Anglo American
Anglo’s copper assets are the most profitable in the current configuration of the corporation’s portfolio. In 2024, copper provided 45% of the company’s EBITDA. This year, copper’s contribution to Anglo’s EBITDA, despite the expected decline in the production of this metal, could grow to 60% if the company completely divests its platinum, diamond, coal and nickel businesses.
With the growing EBITDA in the copper segment, costs were reduced by 9%. However, this is partly due to a decline in the production in Chile, where there is a decrease in copper grades and the production is highly dependent on the availability of water. According to the company’s plans, costs in the copper segment are expected to remain unchanged in 2025. But the production is expected to decrease to 690,000 to 750,000 tons from 773,000 tons a year earlier, which is caused by the problems with water supply and lower copper grades at most mines in Chile.
To support the production at the key copper asset in Chile, the Collahuasi mine (Anglo’s share is 252,200 tons in 2023), where Anglo and Glencore own 44% each, a desalination plant is under construction, the costs of which for Anglo are estimated at $400 mn until 2026 (the total cost of the project was estimated at $3.2 bn). Its commissioning in the first half of 2026 will increase processing at the Collahuasi mine and allow expanding the production by introducing an additional fourth line by the early 2030s.
Anglo estimates copper reserves at three key assets at a total of 49 mn tons of ore.
Processing at another Anglo’s assets in Chile - the Los Bronces project - that produced 215,000 tons in 2023 was partially suspended last year due to ore quality and a shortage of fresh water. Anglo that controls 50.1% of the Los Bronces mine, has agreed that the enterprise will be the consumer for a desalination plant in the Valparaiso region scheduled to become operational from 2026, which can allow the mine to switch to underground mining and produce additional 50,000 to 100,000 tons.
Another key to growth is Anglo’s agreement with Chile’s Codelco to jointly develop the neighboring mines - Los Bronces and Andina - in that country. The production joint venture will help in optimizing the utilization of capacities of the processing facilities at the two operations, as well as reducing the capital expenditure, which allows to unlock the full value of the mining area having the reserves equal to about 2% of the global copper resources.
Anglo’s asset in Peru, the Quellaveco mine, is also cutting its production. Due to declining copper grades, mining operations are underway at the mine aimed at unlocking the potential of the ore body. The company is poised to invest a total of $850 mn in the Quellaveco mine to increase processing from 127,000 tons to 150,000 tons by late 2027 and adapt the tailings disposal system to the anticipated increase in production.
Anglo’s portfolio also includes the greenfield project, the Sakatti polymetallic deposit in Finland, with high grades of copper, nickel, cobalt and platinum group metals. Anglo positions the Sakatti deposit as an important component in the implementation of the EU’s strategy to increase the supply of critical metals from 4% to 10%. The plans are to construct an innovative next-generation mine (FutureSmart Mining) at the deposit having a minimal environmental impact. Anglo has signed a Memorandum of Understanding with the state-owned Finnish Minerals Group on the joint work to develop the Finnish battery value chain. Anglo’s plans are to produce about 100,000 tons of copper equivalent at the Sakatti mine by the early 2030s, according to a company’s presentation. The investment cycle at the Sakatti project is scheduled to start in 2027.
Anglo expects that all these measures will allow the corporation to increase its copper production by 30%, to over 1 mn tons, by the early 2030s.
BHP
While iron ore assets still dominate the profits of BHP, the largest listed miner, due to providing about 60% of EBITDA, the company focuses on developing its copper and potash assets, considering spin-offs of its iron ore and coal divisions in Australia.
The share of copper in BHP’s EBITDA in the second half of the year rose to 39% (or $5 bn) from 25% a year earlier, on the background of rising sales and prices. BHP’s copper output rose by 10% from July to December, 2024 after a 19% growth from FY2022 to FY2024, first of all, due to a 22% increase at its key Escondida asset in Chile (BHP owns 57%) where areas with high-grade ore are under development. In FY2025, BHP expects its production to be between 1.845 mn and 2.045 mn tons compared to 1.87 mn tons a year earlier.
Copper production growth will account for almost half of BHP’s projected capex in FY2025, $4.7 bn out of $10 bn. Copper has dominated BHP’s capex structure since at least FY2020.
BHP’s goal is to reach 2 mn tons of copper by the mid-2030s through the development of existing assets and possible expansion primarily in Chile. 1.4 mn tons out of 2 mn tons will come from its assets in Chile and 600,000 tons - from its assets in South Australia.
The Escondida’s and the Spence’s (Pampa Norte) assets in Chile generate 78% of the EBITDA of the company’s copper division. Like other producers, BHP will face the decline in production due to depleting reserves if the company takes no action. To offset this trend, BHP is preparing to implement seven key projects at both existing assets and new ones. BHP will invest up to $14 bn in these projects from 2028 with the intention to increase the company’s production by 430,000 to 540,000 tons per year, to an average of 1.4 mn tons by the 2030s. The plans are to take final investment decisions (FIDs) for these projects between FY2026 and FY2029, provided that necessary permits are received. In total, BHP’s resources in Chile are estimated at 6.5 bn tons of ore with the copper grade of 0.53%.
These projects include the expansion and reconstruction of the Los Colorados processing facilities (concentrators) and putting the new Laguna Seca concentrator into operation at Escondida, as well as increasing the capacity of the Spence mine and resuming the copper mining at another mine, Cerro Colorado. The company estimates that all the projects have an average capital intensity of $23,000 per ton, which is lower than at similar projects of BHP’s competitors ($27,000 per ton).
BHP also owns 33.75% of another large-scale mine in Latin America - Antamina, a copper-zinc mine in Peru (ranking second in metal production), whose shareholders also include Glencore, Teck, and Mitsubishi. BHP’s share in the mine is from 115,000 to 130,000 tons in FY2025, the joint venture partners are awaiting approvals by regulators to continue mining from 2028 to 2036.
The Vicuña project that includes the Filo del Sol and the Josemaria deposits located on the border between Argentina and Chile could be a large one. According to preliminary estimates, the Josemaria copper-gold deposit is expected to bring about 136,000 tons of copper annually. The development will be carried out by a joint venture between BHP and Canadian Lundin Mining (50/50 shares). The mineral resource assessment for the project will be ready in the first half of the 2025 calendar year. BHP paid $2 bn for its stake in the project.
At the Copper South Australia asset, 100% controlled by BHP, where the production of 300,000 to 325,000 tons is expected in FY2025, the company appraises the potential to increase the output to over 500,000 tons per year from the early 2030s, and by another 150,000 tons later on, which is supported by exploration results at the OD Deeps and the Oak Dam projects. These projects represent the expansion of smelting and refining facilities.
Glencore
Glencore also actively develops its copper segment that leads in profitability within the company along with coking coal segment (EBITDA margin of 44% and 45% in 2024, respectively). In 2024, like-for-like copper output fell by 4%, to 952 mn tons, due to a water supply shortage at Chile’s Collahuasi copper mine, in which Glencore and Anglo own 44% each, and geotechnical challenges at Peru’s Antapaccay copper mine.
Against the backdrop of falling production, adjusted EBITDA of the copper segment fell by 5% by 2023, to $3.8 bn, despite a 7% increase in selling prices.
In 2025, Glencore, like Anglo American, expects a reduction in copper production, to 850,000 to 910,000 tons, as the problems with the availability of water resources at Latin America’s assets and declining copper grades persist. The production figures at the assets of the Mutanda and the Kamoto Copper Company (KCC, DR Congo) in Africa are growing, but they bring only 250,000 tons (by 2027, their contribution is expected to grow to 300,000 tons).
By 2028, Glencore expects to return to the annual copper production of 1 mn tons achieved in 2023. To do this, Glencore’s plans are to allocate up to 40% of total capital investments in the mining assets of the copper segment from 2025 to 2027, the annual level of which is $6.6 bn. In 2024, capital investments in Glencore’s copper assets already were $3.2 bn out of a total of $7 bn (up 10%, with $556 mn of which spent on solving the water supply problem). The funds are used to eliminate the problems, expand and strip the Collahuasi copper mine, as well as strip the rich ore areas and upgrade the equipment at the Antapaccay and the KCC deposits. The commissioning of the desalination plant and the expansion of the Collahuasi mine, as well as an access to rich areas at the Antapaccay copper mine, will allow Glencore’s assets in Latin America to increase its copper production to 650,000 tons by 2028.
Glencore is also appraising brownfield projects that could potentially add another 1 mn tons of copper per year, the company says in its 2024 annual report. These include the El Pachon and the Mara projects (Argentina), mining the sulphide ores at the Mutanda mine (DR Congo), the Coroccohuayco deposit (Peru), and an additional line at the Collahuasi project. The projects are not costly, Glencore notes, with capital intensity of just $15,000 to $20,000 per ton of copper equivalent.
The total copper resources at Glencore’s assets and projects in the measured + indicated + inferred categories are estimated at 19.9 bn tons with an average copper grade of 0.56%. The parameters of the main projects are shown in the following slide from the Glencore presentation.
‘Shovel worthy’ copper projects are in the process of obtaining an approval, provided that they are supported by the market and the investment environment, Glencore says.
Sergey Bondarenko for Rough&Polished
