Declining domestic copper grades compel China to look overseas: Fitch

China will ramp up overseas copper investment in the coming years as the domestic copper production capacity fails to meet internal consumption demand, Fitch Solutions Macro Research said in its report.

“We forecast China's copper production to increase to 1.92 million tonne by 2028 from 1.64 million tonne in 2019, up at an average annual growth rate of 1.9 per cent, marking a substantial slowdown from the average growth of 4.8 percent over the previous 10-year period due to declining copper ore grades in the country,” it said.

Furthermore, an increase in government efforts to raise environmental standards will slow refined copper production in China by shutting down over-capacity, further psuhing copper miners' and refiners ' to look beyond the country's borders to ensure necessary supply, it said.

Meanwhile, China remains by far the largest global consumer of copper despite consumption faltering this year due to rising trade tensions with the US.

“We expect the country's expanding power and construction sectors, which account for 45 percent and 10 percent, respectively, of domestic copper end-use, to continue providing support for global copper demand,” said Fitch Solutions.

The country's rise as the largest electric vehicle (EV) market will add further support to global consumption growth as EVs contain significantly more copper than conventional internal combustion engine vehicles, it said.

The report pointed out that Africa will be a growing destination of Chinese copper mining investment, as low production costs and untapped, high-grade copper deposits attract miners looking to expand their global footprints.