Copper traded at a record high of US$10,747 (AU$14,979) per tonne in 2021, and 2022 is already looking to be another record-breaking year.

Copper price forecasts are continually being revised upwards as global events tighten the supply squeeze and demand continues to grow for the vital metal.

Over $10,000 per tonne

Copper prices remained above one-year and three-year averages at the start of the year before May futures jumped to US$10,373 per tonne in New York, signalling another rise above US$10,000 and approaching record levels.

This exceeds the already promising projections of financial analyst Fitch Solutions, which forecast a high of US$9200 per tonne in January, revised from an earlier forecast of US$8800 per tonne as inventories remained tight.

Reasons behind the price spike include concerns about supply disruptions from underperforming nations and the Ukraine invasion as well as rising interest rates and slow economic growth in major markets such as China.

Robust demand

Addressing the supply shortage is critical to meet the ever-growing demand for copper being forecast for the coming decades as countries around the world transition to a green economy.

This is because copper is a vital component of many renewable energy technologies, including batteries and wiring for electric and hybrid vehicles. Around 83kg of copper are used for each electric vehicle (EV) and 60kg for plug-in hybrid vehicles, according to the Copper Alliance.

With sales of EVs expected to increase from 3 million in 2021 to 15 million by 2030, Fitch believes that the copper market will remain in deficit, driving prices ever higher and incentivising new projects.

Historically low stocks

The global copper supply remains stressed, with inventories held by major exchanges Comex, LME and Shanghai Futures Exchange in New York amounting to 200,402 tonnes in February, representing no more than three days' worth of worldwide copper consumption.

The supply problem has numerous fronts. Copper producers in Latin America have faced disruptions, with Chile recording its lowest January figures since 2011 and protests interrupting operations at Peru's Las Bambas copper mine.

Russia's conflict with Ukraine could also drive prices higher if sanctions continue against trade with Russia, forcing suppliers to use alternate trade routes. More optimistically, Chinese smelters have increased production since the energy crisis slowed production last October.

New copper projects

Key to relieving the supply shortage and meeting the growing demand for the red metal will be the establishment and expansion of copper mining projects, including many in Australia.

Copper Mining and Exploration in Australia

Locksley Resources Limited (ASX:LKY)

Locksley Resources Limited (ASX:LKY) is an Australian exploration company. They are focused on identifying and assessing opportunities for the acquisition, exploration and development of copper and other mineral resources projects in Australia that have the potential to deliver significant growth for shareholders.

Locksley Resources was incorporated in October 2018 and has acquired 100% legal and beneficial interest in the highly prospective Tottenham Copper-Gold Project.

To keep up to date with their news and progress, and for more information about copper investment as a whole, subscribe to the Locksley Resources Limited Chairman's List.