What could be the lowest price for copper on the LME?
I don’t think there is a definitive answer to this question, but certain conclusions can be drawn from an analysis of historical data and the costs of copper mining and refining.
Below are my thoughts following an analysis of industry data:
- The cost of extracting 1 tonne copper The copper content in the ore may vary depending on the period and the region in which mining took place. The cost of copper mining has fluctuated due to various factors, such as mining technologies, geological conditions, the copper content of the ore and economic policy (e.g. mineral tax).
- An analysis of the data for 2020–2022 shows that, depending on the factors mentioned above, the cost of extracting copper ore ranged from 4,500 to 6,000 dollars per tonne of copper contained in the ore.
- To this must be added the cost of copper refining, which may vary depending on the refining technologies used, energy prices and the location of the refinery. Copper refining is a process in which raw copper extracted from ore is purified and processed into pure metal in the form of cathodes.
- The average cost of copper refining in 2022 was approximately $1,200 per tonne.
- In view of the above, it seems reasonable to conclude that the price of copper on LME In the long term, it should not be lower than $7,200 per tonne.
- If the price of copper remains below $7,200 per tonne, some mines will become unprofitable, which in the long term will lead to their closure and, consequently, a fall in production and a situation where demand outstrips supply
