Capital Demands Soar For New Copper Supply
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Markit3.51K FollowersFollow5ShareSavePlay(10min)CommentsSummaryThe accelerating global energy transition has enhanced the demand for copper, yet bringing new supply online has become increasingly costly.The US and Canada region hosts the most capital-intensive projects, with the Copper World, Gunnison and Casino projects driving the regional average up.Large projects, such as Reko Diq, can achieve near-average capital intensity due to their massive production scale. Monty Rakusen/DigitalVision via Getty Images The accelerating global energy transition has enhanced the demand for copper, yet bringing new supply online has become increasingly costly. A key metric for measuring this financial challenge is capital intensity, which for this analysis is definedThis article was written byMarkit3.51K FollowersFollowIHS Markit (Nasdaq: INFO) is a world leader in critical information, analytics and solutions for the major industries and markets that drive economies worldwide. The company delivers next-generation information, analytics and solutions to customers in business, finance and government, improving their operational efficiency and providing deep insights that lead to well-informed, confident decisions. IHS Markit has more than 50,000 key business and government customers, including 80 percent of the Fortune Global 500 and the world’s leading financial institutions. Headquartered in London, IHS Markit is committed to sustainable, profitable growth.Quick InsightsHow does rising capital intensity impact future copper supply economics?Rising capital intensity, averaging $22,359/t/y, signals higher upfront investment and a more expensive copper supply, necessitating higher sustained copper prices to incentivize new production.What differentiates capital intensity between US/Canada and Latin America copper projects?US/Canada projects average $28,910/t/y due to remote locations, regulatory complexity, and advanced processing, while Latin America averages $19,049/t/y, reflecting more favorable conditions and lower initial capex.How do project scale and processing complexity affect long-term copper project costs?Large projects like Reko Diq achieve moderate capital intensity through scale, while smaller or technically complex mines may have lower upfront capex but face higher long-term operating costs and AISC.Recommended For You