China's copper mines: Identifying key cost drivers
Over the past 18 months, the global copper mining industry has announced cuts of 865kt of metal from the market in response to lower prices. We currently estimate 75kt, or 9% of these curtailments have taken place in China. On face value, this seems consistent with the country's overall market share; China is expected to contribute over 1.6Mt of mined copper this year, equivalent to 8% of total global supply. But when we consider that many view China's mines as much higher cost than the global average, why haven't we seen more of them closing? In this Insight we have reviewed some of the key characteristics of China's copper mines. In doing so, we have found a number of areas where the cost base seems to be highly competitive when compared to international peers. We identify some key cost drivers to help us infer the likely profitability of China's industry relative to global peers.