KOBE, Japan, Nov 14 (Reuters) - The copper market will start to enter a "substantial" supply deficit from 2021, pushing prices of the industrial metal higher, the head of Chile's national mining association Sonami said on Monday.
"In the near term, mining companies are not investing in additional capacity and copper demand is growing at a pace of around 2 percent a year," Sonami Chairman Diego Hernandez told the Copper 2016 industry conference in Kobe, Japan.
Supply growth will likely begin to fall from around 2019 and the market will face a substantial deficit from around 2021 as it coincides with a recovery in demand growth, driven by population growth and urbanization in China and other emerging countries, and less fossil fuel use amid climate change, Hernandez said.
Renewable energy systems such as solar and wind power on average require eight to 12 times more copper per kilowatt than traditional generation, he said.
To encourage new mining projects, miners need a long-term copper price outlook of about $5,700 to 6,600 a tonne, Hernandez who is former chief executive at Antofagasta, told reporters later on the sideline of the conference.
"Long-term price expectations should be much higher from 2018, if we are optimistic, or from 2020 if we are pessimistic," he said.
"Supply and demand will be tight, and then copper prices should go up," he said, without giving specific levels.
As for the recent rally in copper prices, Hernandez said expectations for higher infrastructure spending in the United States following Donald Trump's presidential election win was a major driver.
"Copper demand and supply are nearly balanced. But the prices went up only because of expectations," he said, suggesting that the trend may not be sustainable.
Copper prices have surged more than 20 percent this month, led by stronger economic indicators out of the world's biggest consumer China.
Three-month copper on the London Metal Exchange briefly hit $6,025.50 a tonne on Friday, its highest level since June 2015, though it pared some of the gains on Monday.
Trump has said he plans to fix inner cities, rebuild highways and infrastructure, while erecting barriers against cheap imports, leading to higher consumption of industrial raw materials.
Chile is the world's largest copper producer. (Reporting by Yuka Obayashi; Editing by Christian Schmollinger)