Copper Shortages & Price Increases in 2023

Peru is the world’s second-largest copper supplier in the world. The regional disruptions are putting about 30 percent of the country’s copper production at risk amid an already challenging global copper market.  

Shipments from four mines that produce about half of Peru's copper; MMG's Las Bambas, Freeport McMoRan's Cerro Verde, Glencore's Antapaccay, and Hudbay Minerals' Constancia, have been affected due to the unrest.

With global copper inventories at an all-time low, prices have increased as demand grows. According to a recent Goldman Sachs commodities forecast, this change is due to various mine disruptions and declining capital expenditures on copper mining.  

Background

Copper demand came under pressure last year as mines slowed down production due to politics, the economy, and coronavirus lockdowns. Currently, Chile is the largest producer of copper in the world, and its production of copper has dropped since last year.  

But the demand for copper continues to rise in part due to increased demand for clean energy technologies and semiconductors. Unfortunately, the current copper mine operations cannot keep up. According to the International Copper Study Group (ICSG), only two major copper mines were brought online from 2017 to 2021. New mines take significant investments and take many years to build so they can be productive.  

Currently, two copper greenfield projects ramp up operations, Ivanhoe Mines’ Kamoa Kakula in the Democratic Republic of Congo (DRC) and Anglo American’s Quellaveco mine in Peru. Still, their output is not enough due to operational problems of the existing global mines.

Other new mine projects include Glencore developing the El Pachon mine in Argentina, and the Udokan Copper project is set to start production in Russia this year.

Impact on the Technology Industry

Technology and semiconductors are highly dependent on copper, and the current copper deficit is becoming a worry.  

Copper is used in everything from silicon integrated circuits (ICs), PCBs, and CCLs, to external cables, connectors, and electric wiring for cooling computer components.  

The substrates that transmit user commands to a computer's chips and relay the results are made of copper, and major semiconductor companies such as Intel, AMD, and Nvidia recently highlighted the crucial role of substrates in chip manufacturing. Needless to say that copper shortages can impact electronic component supplies.  

Last year Vishay, Walsin, and TDK issued PCNs and EOLs as they stopped using copper in their capacitors.  

Copper is also critical in green energy solutions such as solar panels and EV batteries. The International Energy Agency (IEA) has predicted that demand for copper will be up 45% by 2040 due to the green energy sector.  

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