The Worl d Copper Factbook 2019 International Copper Study Group 15 Constraints on Copper Supply With cop p er conce n trate in strong de m a nd there has been growi n g interest in un derstan d ing the obstacles that can prevent copper mi ne supply from coming on st r e a m Below are some of the operat io na l an d financial constraints i d entifi ed fro m the study For more i n formation about ICS G research re lated to constraints on co pper supply please con t act the ICS G Secre t ariat at mailicsgorg Declining ore grades a serious issue in developed copper areas such as the USA and Chile Project finance prolonged economic and price volatility ma y have significant impact on cost of capital Tax investment regim e s recent research indicates these are less important than geologi c al endowments Other cost issues lower capital expenditure may have adve r s e long term effect on copper supply op e r a t i n g cost escalation Water supply a critical issue in dry mining districts Energy coal is the fuel chosen to po wer main copper mines and processes climat e cha n ge may increase costs Other envir o nmental issues governments are becoming more aware of the impact of mining to the surrounding environment in recent year s In count ries like Peru and the Philippines the relationship with indigenous community is also a key factor Resource n a tionalism It has beco me a priority for certain governments to develop their min e ral re source s that have not been exploited until now While willing to develop their natural resources countries might be seeking to extract strong re venue flows from them It will be important to balance royalt yta xation levels with the need to encourage capital investment to develop their rising industries Sulphuric acid supply and price 16 cost factor for SX EW projects Skilled labor open labor market s would help addres s this constraint Labor strikes tend to increas e when refin e d prices are hi gh and GDP is growing faster but tend to be lo n g er and less frequent otherwise High domes t ic costs if the r e is Dut ch disease resulting in higher exchang e rates due in part to strong exports Rate between imported inputs and domestic input costs affected by the curr ency strength of the producer Political risks Secu rity and transport accessibility is crucia l to mine operation