Copper prices may need to rise far higher to unlock the next wave of global supply, according to JPMorgan, which has lifted its long-term price forecast and reiterated a bullish stance on miners and equipment makers, including Antofagasta PLC.
The bank now expects the copper market deficit to widen to about 2 million tonnes by 2030 and 8 million tonnes by 2035, requiring significant greenfield and brownfield investment.
Analysis of more than 30 projects with over 5 million tonnes per annum of capacity suggests around $150 billion of capital expenditure will be needed to meet demand.
Argentina stands out as a new supply frontier, with around 1.2 million tonnes per annum of projects requiring roughly $12,000 per tonne to generate a 15% internal rate of return.
The investment bank has raised its long-term copper price forecast to $12,000 per tonne, from $11,000 previously, and lifted fair values for EMEA copper miners by about 10%.
Antofagasta remains its top pick, with a new price target of £44 per share.
The bank is also overweight Rio Tinto Ltd and First Quantum Minerals, as well as mining equipment makers Weir Group PLC, Sandvik, FLSmidth and Metso, based on accelerating order momentum.