SUPPLY CHAINS & OPERATIONS
M ore than any other mineral or metal , copper is seen as being a barometer of the world economy . It is a key component in the construction of buildings , bridges , and other infrastructure projects , which is why an increase in copper prices can have a ripple effect on the broader economy .
Similarly , a fall in the demand for copper can signify economic slowdown .
For example Chile – the world ’ s largest producer of copper , outputting 27 % of global supply – saw a year-on-year fall of 7 % in copper production in 2023 . This was partly because of China ’ s property crash . But this China-prompted dip in copper demand does not come close to telling the whole story . Last year saw a global copper deficit , and analysts predict the shortfall could potentially extend throughout the rest of the decade .
The world ’ s copper shortage is being fuelled by increasingly challenging supply streams in South America . Peru , the world ’ s second-largest copper producer , has been hit by social unrest . Meanwhile , Panama ’ s biggest copper mine ( First Quantum Mine ) is in a dispute with the government over taxes . Chile ’ s fall-off in copper production – the China property crash notwithstanding – was also explained by lower ore grades , water shortages and delays to major investment projects .
But the copper shortfall is mainly a demand-driven issue , and it is this that is driving price pressures .
As the world continues to shift towards sustainable energy sources the demand for
66 June 2024