Copper costs in the year of soaring inflation

CRU has recently published its annual Copper Cost Report 2022 in the year of soaring inflation. This yearly report covers all aspects of copper costs trajectory now, and in the mid-term future.

Copper costs, in line with all other base metals, saw significant inflation this year. Site costs are expected to sharply increase in 2022 after rising in 2021, bringing about the biggest consecutive cost increase in the last decade. This is a result of higher input prices across the board – including power, fuel, labour, and chemicals. Higher by-product credits, however, have cushioned these cost increases, while historically high copper prices have pushed miners’ margins to highs not seen in a decade.

Operating performance in the copper industry has remained essentially unchanged, with head grades expected to remain flat in 2022 despite slight increases in ore processing rates. Central and South America will remain the biggest and most cost-competitive region in the world in terms of site costs, while African copper mines will keep driving short-term supply growth.

As miners reap the benefits of historically high metal prices, inflation has started to build up within their cost structure. Declining metal prices and rising costs are the perfect storm for a squeeze on miners’ margins, but how likely is it to happen? Contact us to find out more about copper costs in the year of soaring inflation.

These are just snippets of the detailed analysis the report covers. CRU’s Base Metals Cost & Emissions team covers all that matters to the industry – from producers’ cost inflation to site cost drivers and trends in cost-competitiveness. All of this is discussed with our subscribers regularly.