Democratic Republic of Congo Replaces Peru as the Second Largest Copper Exporter

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There’s a new kid on the block in copper production. Media reports say the Democratic Republic of Congo (DRC) continues to put up a tough fight against Peru, the world’s second-biggest copper producer. If the latter does not square up, expects feel the DRC may end up taking its #2 title. Of course, such competition could not only affect copper prices today, but also in the near future.

Bloomberg recently reported on a prediction from consulting firm Wood Mackenzie. According to the article, Wood Mackenzie expects the DRC’s copper production will overtake Peru’s by 2026 or 2027. Indeed, as of this writing, the DRC has nearly matched Peru’s copper production and exports. However, Peru’s success in achieving political consensus and averting disruptions to new projects will ultimately prove pivotal in determining the outcome of this race. 

copper prices today could change with DRC replacing Peru as the no. 2 copper exporter.

In 2016, Peru actually took over the top position from neighboring Chile thanks to a surge in new projects. That said, a question mark hovers over Peru’s copper production capabilities. This mainly has to do with recent political and social instability. In the meantime, the DRC continues to make remarkable progress, something many experts attribute to the extraction of high-grade ore by Ivanhoe Mines Ltd. in Kamoa-Kakula. Indeed, Congolese exports continues to enjoy a significant surge, doubling since 2018. According to export figures from 2022, both Peru and DRC now hover at around 2.4 million tons a year.

DNC and Peru Neck and Neck in Copper Production 

Peru may have a lot of influence over the copper price today, but recent environmental moves could jeopardize this. For instance, Codelco, the world’s largest copper producer, recently took a step towards more sustainable mining practices when it closed its Ventanas copper smelter in a bid to reduce pollution. Located near Chile’s central coast, the facility had a smelting capacity of 150,000 MT. 

However, Team DRC shouldn’t celebrate just yet, as Peru does not plan to go down without a fight. Peru’s Mining Minister, Oscar Vera, recently stated that his country is very bullish about holding its spot as the #2 copper producer in the world. Despite the Ventanas setback, there are numerous key projects set to move forward. Moreover, Peru continues to show signs that it is overcoming the setbacks from the previous year and entering a sustained rebound phase.

For example, copper production in Peru increased dramatically in the first four months of this year. The latest figures place March output at 219,274.98 tons, which is a rather impressive rise from February’s 192,333.73 tons. In April, Peru’s copper production was robust enough to place the total output for the first four months of the year at 837,514 tons. This marked a notable growth of 15.7% compared to the same period the previous year, during which the production was just 723,931 tons. Cerro Verde, Peru’s leading producer, delivered a particularly strong performance. According to analysts, the company’s output grew by 3.1% in April compared to the same month in 2022, producing a total of 39,498 tons.

Copper Prices Today Remain Influenced by Many Factors 

Five countries, Chile, Peru, Australia, Mexico, and the United States, account for the majority of global copper reserves. Therefore, the mining, processing, and export of copper play a crucial role in the economies of these nations. In Chile’s case, copper contributed as much as 14% to its 2022 GDP.

According to The World Copper Factbook 2022, Chile accounted for nearly one-third of the world’s copper mine production in 2021, yielding 5.6 million metric tons in all. Peru also experienced substantial growth in copper production, representing 10.8% of production of global output that same year.

Yet copper prices increased at the start of the week following reports that Chile’s copper production had declined this April. For example, on Monday, copper settled up by 0.71% to $721.15. This figure reflects the impact of Chile’s 1.1% year-on-year decrease in copper output (to 417,279 MT). It also represents the lowest level for the same period in recent years and a significant drop compared to the previous month.

Meanwhile, the U.S. and many European countries continue to look for ways to diversify sources to reduce reliance on China. As the use of refined copper increases, analysts expect the projected copper mining capacity to reach 31.2 million tons by 2026. So far, there has been a 447 million tons increase in copper reserves, bringing the current total to 890,000 million metric tons. However, some analysts continue to express concerns regarding resource constraints in copper production.

Source: Metal Miner