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Peru's Copper Production in 2025 Is Expected to Remain Flat for the Third Consecutive Year

  • Dec 20, 2024, at 6:55 pm
[Peru's Copper Production Expected to Remain Flat for Third Consecutive Year in 2025] Peru's top mining association and industry analysts stated that copper production is being constrained due to declining ore grades and a lack of new projects. Peru's copper production in 2025 is expected to remain flat for the third consecutive year. After years of extraction, declining ore grades have made it increasingly difficult for the country's miners to maintain production levels. Meanwhile, anticipated demand from EVs, renewable energy, and data centres could lead to a severe copper supply shortage over the next decade. (Webstock Inc.)

According to Webstock Inc., citing foreign media on December 20, Peru's top mining association and industry analysts stated that due to declining ore grades and a lack of new projects, copper production has been constrained, and Peru's copper production in 2025 is expected to remain flat for the third consecutive year.

After years of mining, declining ore grades have made it increasingly difficult for the country's miners to maintain production levels. Meanwhile, anticipated demand from EVs, renewable energy, and data centres could lead to a severe copper supply shortage over the next decade.

The expectation of a supply deficit has prompted some global mining giants to secure more supply through large-scale acquisitions. BHP made a $49 billion bid this year to acquire Anglo American but was rejected.

At the beginning of the year, copper prices on the London Metal Exchange (LME) were just above $8,580/mt. After climbing to a record high of over $11,000/mt in May, the latest LME three-month copper contract was reported at $8,914/mt.

Peru's top mining association, SNMPE, stated that due to miners facing declining ore grades and bottlenecks in new project development, the country's copper production in 2025 is expected to be around 2.8 million mt, flat compared to 2023 and similar to the forecast for 2024.

Victor Gobitz, president of SNMPE, said in an interview last week: "By 2025, Peru's copper production is expected to be similar to this year's forecast of 2.8 million mt."

Peru's Ministry of Energy and Mines has not yet released a production forecast for 2025 and did not respond to requests for comment.

Juan Carlos Ortiz, vice president of the Institute of Mining Engineers, also expects production to remain flat, citing the lack of new projects.

Ortiz said: "We forecast copper production will be the same as in 2024."

In the short term, significant changes are unlikely. Peru's last new mine was Anglo American's Quellaveco mine, which was put into operation in 2022 with an investment of $5.5 billion and an estimated annual capacity of 300,000 mt. The mine currently accounts for over 10% of the country's domestic output.

In the best-case scenario, Peru's production could be boosted by Southern Copper's Tia Maria project and Teck Resources' Zafranal project, which are expected to be put into operation in 2027 and 2029, respectively, collectively increasing annual production by about 150,000 mt.

Miners are also striving to enhance processing capacity to offset the impact of declining ore grades.

So far this year, $3.8 billion has been invested in the industry, with most of it allocated to beneficiation plants and equipment, up 2% YoY.

Additionally, according to data from the private electricity sector organization COES, copper mining energy consumption increased by 2.3% YoY as of October.

Gobitz said: "What is important now is the progress of these efforts," referring to Tia Maria, Zafranal, and smaller-scale mine expansion projects. "We are not seeing large projects like Quellaveco."

Among Peru's ten largest copper mines, seven saw production decline YoY as of October, the latest month for which official data is available.

As of October, the largest copper mine, Freeport McMoRan's Cerro Verde mine, reported a 5.4% YoY decline in production. Freeport previously informed investors that declining ore grades are expected to impact 2024 sales volumes.

Freeport spokesperson Linda Hayes said: "Annual production will be affected by ore grades, but Cerro Verde's operating rates have been very strong this year."

She added that most of Cerro Verde's expenditures are focused on improving operations and urged the Peruvian government to streamline regulatory procedures and encourage exploration.

Despite Peru's challenges, the country may have an opportunity to reclaim its position as the world's second-largest copper producer from its African competitor. As of the end of August, Congo's production had fallen nearly 6% compared to 2023, providing Peru with a chance to surpass it.

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