(Minews) - Supply from major new copper mines may fall well short of expectations over the next few years, according to Codelco’s vp of non-refined sales, Roberto Ecclefield.
Guidance for 2013 shows copper output hitting more than 21 million tonnes in 2015, with 1.7 million tonnes being added from new mining projects, Ecclefield told delegates at the Metal Bulletin International Copper conference in Milan on Tuesday April 12.
This “very optimistic” outlook would suggest that global copper stocks could reach 1.7 million tonnes as the market moves into significant oversupply, he said.
But Codelco’s analysis of the underperformance in supply from new projects in recent years suggests that new capacity due to come online over the next few years could fall short of expectations.
In 2010, for example, forecasts indicated that one million tonnes of new supply would be added from new projects in 2013; in the event, the five largest projects delivered half of forecasted production in their first year, and 65% of planned output in their first four years, Ecclefield said.
The latest output guidance for mines that are set to come online in 2014 is 35% lower than forecasts in 2010, he added.
A 35% shortfall in 2015 would mean as much as 1.4 million tones could be lost from current supply guidance, bringing the market back towards balance and stalling any significant increase in stocks, he said.
Consensus expectations suggest that the market will move into a 348,000-tonne surplus this year, but by adjusting for a 35% shortfall from new projects, the balance would be 148,000 tonnes, Ecclefield said.
On the same basis, the 650,000-tonne surplus slated for 2015 would be cut to 250,000 tonnes, while the market would move into a 250,000-tonne deficit in 2016 as new production falls short of expectations by 500,000 tonnes, he said.
The copper market has already seen significant cuts to new supply in 2014, after Chinalco lowered output targets for the Toromocho project in Peru and Pan Pacific Copper delayed the start-up of the Caserones mine in Chile.
