On January 6, CCTV Finance reported that China has made a major breakthrough in mineral exploration on the Qinghai-Tibet Plateau, with the newly discovered copper ore resources amounting to more than 20 million tons.
Based on a mining grade of 0.6%, the newly discovered 20 million tons of copper resources in the Qinghai-Tibet Plateau, when converted into reserves, amount to approximately 120,000 tons, classifying it as a medium-sized copper deposit.
According to the "Standards for Classification of Mineral Resource Reserves" issued by the Ministry of Natural Resources in 2022, a copper mine with resource reserves greater than or equal to 500,000 tons is a large-scale copper mine; one with resource reserves between 100,000 tons and 500,000 tons is a medium-scale copper mine; and one with resource reserves less than 100,000 tons is a small-scale copper mine.
Tang Zhihao, an analyst at Zhuochuang Information, told Jiemian News that from a strategic perspective, the newly discovered copper ore resources will significantly improve the domestic self-sufficiency rate of copper resources, reduce dependence on external markets, and ensure the safety of the domestic copper industry chain and supply chain.
At present, four ten-million-ton copper ore resource bases, namely Yulong, Duolong, Julong-Jiama and Xiong Village-Zhuno, have been formed on the Qinghai-Tibet Plateau, with a predicted resource potential of 150 million tons, which is expected to become a world-class copper resource base.
The Ministry of Natural Resources and the China Geological Survey stated that they will continue to increase efforts in basic geological surveys of mineral resources, enhance the leading role of scientific and technological innovation, clarify the家底 of copper ore resources, strive to build a number of new large-scale copper ore resource bases, and form a modern copper ore resource industry economic demonstration zone.
China is the world's largest consumer of copper, accounting for more than 50% of the global total copper consumption. Copper is mainly used in fields such as power grids, real estate, automobiles, and new energy. Among these, the demand from the power grid sector accounts for half of the total copper demand.
China's copper ore reserves and output account for a relatively small proportion of the world's total. In 2023, China's copper resource reserves were 40.65 million tons, accounting for approximately 4.07% of the global copper reserves in the same period; the output of mined copper was 1.7 million tons, accounting for 7.7% of the global mined copper output; the external dependence on copper concentrate was about 80%, with the main importing countries including Chile, Peru, Mongolia, etc.
In terms of economic value, Wu Yifan, a non-ferrous metals analyst in Shanghai, said that considering factors such as the harsh natural and geographical environment of the Qinghai-Tibet Plateau, backward infrastructure, and insufficient advanced equipment and talents, it is not easy for the 20 million tons of resources to realize industrial and commercial value, which will pose great challenges to engineering projects and labor costs.
The Qinghai-Tibet Plateau is one of the major concentration areas of copper ore reserves in China. The copper ore reserves in this region, together with those in Jiangxi and Yunnan provinces, account for more than 70% of the national total. However, due to multiple factors such as low ore grade and complex natural environment, the mining degree and output are not high.
Take Yulong Copper Mine as an example. Yulong Copper Mine is the main mine of Western Mining. According to the 2023 annual report of Western Mining Co., Ltd., by the end of 2023, Yulong Copper Mine had copper ore resources of 855 million tons, retained copper metal reserves of 5.5828 million tons, and an average copper grade of 0.66%. In November 2023, the reconstruction and expansion project of the first and second concentrators of Yulong Copper Mine was completed, and the ore processing capacity was increased to 22.8 million tons per year. In the whole year of 2023, the output of copper concentrate of Western Mining was only 131,000 tons.
Tang Zhihao stated that to further promote the exploitation of copper ore resources in the Qinghai-Tibet Plateau, it is necessary to continue strengthening geological exploration and resource evaluation in the region, further optimize infrastructure, advance technological innovation and talent cultivation, and enhance policy guidance and support, among other measures.
Talking about the overall trend of copper prices in 2024, Tang Zhihao believes that it generally showed the characteristic of "rising first and then falling". In the first half of 2024, copper prices rose rapidly driven by multiple factors. In May 2024, the LME copper price hit a record high of $11,100 per ton (equivalent to about 81,300 yuan per ton), and the Shanghai copper price hit a record high of 88,900 yuan per ton. After entering the second half of the year, copper prices began to pull back.
Tang Zhihao predicts that the copper price will show an "M"-shaped trend in 2025. Affected by the high base, the price center will move up slightly, and it is expected that the copper price will operate in the range of 72,000-80,000 yuan/ton in 2025.
Shanghai Nonferrous Network also told Jiemian News that in 2025, the price of copper in the external market will be between 10,000 and 10,500 US dollars per ton (equivalent to approximately 73,300 to 76,900 yuan per ton).
From a macro perspective, the loose monetary policy in the United States will have an impact on the copper market through multiple channels such as increasing market liquidity, lowering interest rates, improving demand expectations, influencing exchange rates and market sentiment. There are uncertainties in the policy environment in the second half of 2025, so it is necessary to dynamically monitor changes in U.S. inflation and the dynamics of the Federal Reserve.
Zhuo Chuang Information believes that on the supply side, although the TC processing fee rebounded in the second half of 2024 and smelters' profits gradually recovered, most enterprises are still in a state of loss, causing some enterprises to lower their output targets for 2025. The shortage on the supply side continues to support copper prices. TC processing fee refers to the smelting cost of converting copper concentrate into blister copper (or anode copper).
The main factor contributing to the insufficient price increase in the later period comes from demand. Zhuochuang believes that although there is a shutdown phenomenon at the raw material end currently, the domestic copper supply is still in a state of surplus. In the stage where copper continues to surge, the weakness in the demand side will restrain the extent of its surge.
At present, the end-users with relatively bright demand in the downstream of copper are mainly concentrated in the new energy/charging pile and home appliance cold distribution industries. Other industries are lukewarm and cannot make a significant contribution to copper consumption," said Tang Zhihao.
Green Dahua Futures predicts that in 2025, the supply and demand of copper will still maintain a tight balance.
With the gradual recovery of supply from mines, the supply side will be relatively abundant in 2025. However, due to the increase in trade barriers, imports of scrap copper will continue to decline, which will restrain the overall supply volume.
Green Dahua believes that there is still room for growth in copper demand. With the U.S. economy maintaining a good performance and China's overall loose economic policies, investment will play a more important role in China's economy. On this basis, photovoltaic, new energy vehicles, AI, big data centers, etc. will all become incremental sources of copper demand. In addition, power shortages will become the norm at this stage. It is expected that copper demand will increase significantly in 2025.
