Guolian Minsheng Securities: Copper supply facing long-term mineral capital expenditure shortfall, optimistic about copper sector investment opportunities.

Guolian Minsheng Securities released a research report stating that as the second largest copper producing country in the world, Peru currently still relies mainly on old copper mines for production, with few new mines coming online in the past five years. In addition, the old mines are experiencing a decline in ore grades, leading to limited output growth. Looking at the global perspective, the copper mining supply is facing a long-term problem of insufficient capital expenditure, which constrains the medium to long-term supply of copper. With limited supply growth and the potential for a new round of copper price increases catalyzed by expectations of a Fed rate cut, the investment opportunities in the copper sector are promising. Key points from Guolian Minsheng Securities include: - Peru, the second largest copper producer, has an annual production of over 2.4 million tons. - Peru has abundant mineral resources and is an important producer of base metals and precious metals globally. Currently, Peru is the world's second largest copper producer, as well as a major producer of gold, silver, and zinc. According to the latest data from the US Geological Survey, Peru holds 12.0% of the world's copper reserves, 3.9% of gold reserves, 15.3% of silver reserves, 9.5% of zinc reserves, 5.3% of lead reserves, and 2.8% of tin reserves. Peru's copper production has remained above 2.4 million tons annually, except for the years 2020 and 2021 affected by the pandemic. - Many of the mines in production are old, with few new greenfield projects in the past five years. - The economic environment in Peru is favorable, with infrastructure development progressing rapidly. - Chinese companies hold mining projects with a total capacity of around 600,000 tons per year, with the Toromocho project being the first large-scale copper mining project overseas by a Chinese enterprise. Risks include significant fluctuations in metal prices, geopolitical and policy risks, and currency fluctuation risks.