One of the world's largest copper mines has been ordered to shut down, and Anglo American plc has significantly reduced its production expectations, upending the copper supply outlook for 2024.

The expectation of a copper supply surplus in 2024 seems to have been thwarted.

With a series of new large-scale projects set to launch globally, the coming years were expected to be a bumper period for copper mining. Most industry insiders anticipated a substantial supply surplus before the market tightens again later in the decade. At that time, a surge in demand for electric vehicles and renewable energy infrastructure was expected to clash with a lack of new mines.

However, the mining industry has already highlighted the fragility of copper supply, whether due to political and social opposition, difficulties in developing new businesses, or simply the daily challenges of extracting copper from deep underground.

In the past two weeks, one of the world's largest copper mines has been ordered to close in the face of fierce public protests, and a series of operational setbacks has forced a major miner to significantly downgrade its production expectations.

Last week, the government of Panama officially ordered First Quantum Minerals Ltd., a Canadian company, to cease operations at its Cobre Panama copper mine. The Cobre Panama mine accounts for approximately 1.5% of global copper supply and is estimated to possess copper resources worth over $10 billion.

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As the market was digesting the news of the imminent closure of the giant copper mine, Anglo American plc also announced a bombshell last Friday, declaring a reduction in production at its flagship copper operations in South America.

Despite the company's well-known issues with platinum and iron ore mines in South Africa, the production cut took investors by surprise, causing the company's stock price to plummet by 19%. Anglo American plc reduced its 2024 copper production target from 1 million tons to between 730,000 and 790,000 tons, equivalent to the output of a large copper mine, with production expected to decline further in 2025.

Analysts say the sudden disappearance of about 600,000 tons of supply expectations will turn the market into a balance, or even a deficit. This is also a significant warning for the future: Copper is an essential metal needed for the global economy's decarbonization, which means mining companies will play a key role in facilitating the transition to green energy.

BMO Capital Markets originally predicted a large surplus of refined copper for next year, but now forecasts a slight deficit. Goldman Sachs Group, which has always been bullish on copper, previously predicted a copper supply shortage in 2024 and now expects the supply gap to widen to over 500,000 tons. Jefferies also now expects a severe deficit next year.Nicholas Snowdon and other Goldman Sachs analysts have stated, "Supply cuts have reinforced our view that the copper market is entering a more pronounced period of tightening."

Despite ongoing concerns about the real estate sector, copper prices have so far reacted mildly to supply disruptions, and any signs of demand recovery will hit the market with tightening supplies. Expectations of a loosening market supply in the short term have suppressed copper prices for most of this year, leading to a sideways trend.

In early October, the International Copper Study Group indicated that it expects a copper supply surplus of 467,000 metric tons next year, which is the largest surplus forecast since 2014. Copper inventories at the London Metal Exchange (LME) have soared to a two-year high since mid-year but have now fallen for three consecutive weeks.

Jefferies stated, "Supply disruptions have noticeably increased, and the likelihood of market supply shortages is growing. We may be at the foot of the next bull market."