Copper producers are issuing fresh warnings about price volatility

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Copper producers have issued fresh warnings about price volatility for the red metal – vital to the clean energy transition – as the industry gathers for its most important annual meeting, London Metal Exchange Week.

Iván Arriagada, chief executive of Chilean copper producer Antofagasta, said there was a “disconnect” between government policies that do not issue permits for new mines quickly enough and demand for the metal.

In the next decade, the world will have to add the equivalent of Chile’s entire copper output, he said, or the energy transition “risks being delayed.”

Expected shortages of the metal, which is used in power grids, wiring and electric cars, would mean price swings would be “from time to time”, he said, speaking at the FT Mining Summit last week.

“The copper market has traditionally been very sensitive to the short-term macro contingency,” he added.

His comments came just ahead of LME Week, which starts today, where producers, traders and users meet to agree contracts for the coming year.

“Volatility will be a persistent feature,” added Nicholas Snowdon, head of metals and mining research at Mercuria, a trading house, referring to copper prices. “It’s going to be a rocking chair.”

Last week, copper posted its biggest weekly gain in four months, rising 6% as it topped $10,000 a tonne after China announced stimulus measures expected to support demand in the metal’s biggest consumer. world.

Prices rose to a record high of more than $11,100 in May on tight supply and demand for renewable energy, before sinking over the summer as some analysts questioned repeated miners’ forecasts of shortage.

Jonathan Price, chief executive of Teck Resources, a Canadian copper and zinc producer, said China’s latest additional stimulus measures should “spur new demand”.

However, even rising copper prices may not be “enough to spur the construction of some of the megaprojects that the world will need,” he added.

Establishing new metal mines usually takes years, sometimes more than a decade.

This has fueled lingering concerns about shortages of metals, including copper and lithium, which are used in key manufacturing areas such as infrastructure and car batteries.

Other executives at the FT Mining Summit highlighted the central role copper will play in the coming years and the need to increase supply.

Anglo American chief executive Duncan Wanblad said the world was “almost completely united on how important copper is”. For the company, which is restructuring its activity, “the priority must be copper in the short term”.

Peter Toth, director of development at gold miner Newmont, added: “On an industrial or social level, someone has to build more copper mines.”