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Australia clamps down on copper thefts as dizzying rally powers metal to ‘new oil’ status

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The theft case highlights the booming demand for copper after it surged past US$10,000 a tonne for the first time in two years, driven by tightening supply.

Metal-looting is on the upswing globally, thanks to spike in costs particularly of those linked to the green transition such as electric vehicle manufacturing.

Alongside nickel and lithium, copper is used in EV batteries and charging stations. It is also a key component in electrical equipment such as wiring and motors.

Shifting macroeconomic dynamics stemming from global production problems and the rise of the green energy industry have created spectacular volatility in commodity prices in recent times.

Nickel and lithium faced a glut from overproduction as miners over anticipated demand for the metals, causing prices to sink, while copper’s skyrocketed on the back of a projected supply crunch.

The International Copper Study Group has cut its international supply surplus forecast for 2024 to 162,000 tonnes from an earlier surplus of 467,000 tonnes due to lower-than-anticipated refined copper production.

The global copper production market was hit by various disruptions including the closure of the Panamanian Cobre copper mine and operational problems and project hold-ups at Chile’s Codelco, the world’s largest copper miner.

A mine in Ecuador’s Llurimagua that Codelco planned to develop was also suspended.

Panama’s Cobre copper mine in Donoso. Photo: Reuters

Trading Economics, a business data provider, said market expectations that copper would be needed in artificial intelligence and automation infrastructure have worsened the metal’s shortage.

“However, we think the positive sentiment on display is probably overdone, especially as there are signs of softening demand growth in key metals-consuming sectors in China,” said Capital Economics commodities economist Kieran Tompkins in a note.

“We think prices will ultimately fall back from their recent breathless rally.”

ING’s commodities strategist Ewa Manthey echoed that view.

Last week, Manthey said China held the key to a downward correction, particularly when the prolonged crisis in the country’s property market wasn’t bottoming out and its copper inventories remained high.

“In particular, housing completions, which usually act as a good measure of copper demand, have been on a downtrend this year, down more than 20 per cent year-on-year, pointing at slowing demand for the red metal,” she said in her analysis.

But it has not stopped analysts from predicting that copper prices could jump to US$12,000 before companies were willing to open up new mines and production.

The high costs of setting up a new mine have kicked off acquisition activity.

The race for copper domination was on full display as one of the world’s biggest miners BHP continued to hunt down a takeover of mining juggernaut Anglo American.

A surge in copper prices has sparked a profitable black market for the metal. Photo: NSW police

The uptick in copper metal theft cases worldwide also prompted investment bank Goldman Sachs to call the alloy “the new oil”.

Last year, an Australian local council demanded the Queensland state government to crack down on the copper black market after theft of the malleable product caused blackouts in housing estates.

The council said copper cables were robbed from public works projects like sporting field upgrades, street lights, and even train stations.

Police said they were surprised no one had been killed after thieves ripped off “wires from out of the ground” in broad daylight.

Singapore police arrested a man for stealing copper cables from a construction site last year.

In Europe, copper-laden signal cables and wires were being stolen from railroads.

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