SANTIAGO/LONDON (Reuters) - As top copper producer Chile starts to lose market share, players are betting on fledging suppliers to help feed hunger for the red metal, but no single country is likely to replicate the South American nation's boom of the last century.
Chile produces about a third of the global supply of copper, a key raw material for construction and power that is vital for industrialisation. With consumption rising 4 percent yearly, the country's output growth is not enough to meet additional demand.
Its market share is being eroded by spiralling costs at ageing deposits, with neighbouring Peru and Africa's Democratic Republic of Congo (DRC) and Zambia gaining ground.
While those countries are poised to become large suppliers in a more fragmented market, the emergence of a single, giant challenger to Chile is unlikely in the foreseeable future due to geological, political and infrastructure constraints.
"Is there ever going to be another source of supply as good as Chile? No," Bernstein Research analyst Paul Gait said.
"Collectively Peru, the DRC and Zambia have half the geological endowment of Chile. They are great copper locations but they won't be able to do what Chile did to the copper market in the 20th century."
Chile accounted for almost 34 percent of global output of the metal in 2010 but its share fell to less than 32 percent in 2013, according to data from Cochilco, a body that advises Santiago on matters concerning copper.
Thomson Reuters GFMS forecasts Chile's contribution will decline to less than 30 percent in 2016.
Riven along its length by a crack in the Earth's crust that makes it one of the world's most seismic zones and creates the perfect conditions for large porphyry copper deposits, Chile became the top copper supplier in the 1980s, after the closure of high-cost mines in previous No.1 the United States.
The discovery in the 1980s of deposits such as Escondida, now the world's largest copper mine, proved the country was rich in the metal that it could produce cheaply and export quickly.
However, ore grades are falling, mines are getting deeper, water availability is scarce and energy is expensive.
Even replacing existing supply is extremely costly.
To increase capacity from 2012's 1.7 million tonnes to 2 million tonnes by 2021, state-owned Codelco, the world's No.1 copper producer, needs to invest some $30 billion.
A seawater desalination plant to provide Escondida a steady water supply, necessary to process the metal, will cost global miner BHP Billiton $3.4 billion.
Some costly expansion projects have been delayed after a 30 percent drop in copper prices in the past three years due to slowing economic growth in top consumer China.
"The outlook for Chilean mining has become much more complicated in recent years. Probably not all the projections for the increases in production will come about," said Juan Carlos Guajardo, head of Chilean mining think tank CESCO.
Scientists at the U.S. Geological Survey think there is plenty of metal still around, with 3.5 billion tonnes of undiscovered copper in 11 regions on six continents. Of that, they estimate 2.5 billion tonnes to be economic under current conditions and technology.
Peru is upping its game and is expected to make up more than 10 percent of copper output by 2016, from 7 percent in 2013.
With less-expensive energy and labour, Peru's copper production cash costs are around 111 U.S. cents to the pound, compared to more than 180 for Chile.
Mining companies in Peru, however, often face strong opposition from local communities who object to the large projects they see as polluting.
"Although in the medium term Peru's production will expand significantly, its total level will continue to be a pretty long way behind Chile's," Codelco's exiting chief executive Thomas Keller told Reuters.
Chile's copper reserves represent 28 percent of world reserves, while Peru's are 10 percent, Keller said.
Some of the highest-quality reserves are to be found in the African copper belt, thinner sediment-hosted deposits that cross the DRC and Zambia.
Output from the area has grown significantly in the last few years, with companies such as Glencore, First Quantum and Vedanta operating in the region.
But although production costs are lower than in Chile, the mines are a long way from the coast and a good transport network is lacking.
Energy availability is also a major constraint, especially in the DRC. Electricity supply is low and unreliable, and building power plants is no cheap exercise.
"It's like musical chairs: there just isn't enough power for everyone. So for the next five years it will be difficult to increase production there," an executive at a mining company said. "Also, it is not a country as welcoming as Chile for investment. You can't build an Escondida there."
Political risk, especially in the DRC, remains a key deterrent. First Quantum, for example, saw the rights it had on some Congolese copper mines, including the sought-after Frontier, being seized by the government in 2009 and some of them were then sold to rival company ENRC.
In 2012, after a bitter dispute over the rights, the two companies came to a financial settlement that left ENRC in control of all former First Quantum assets in the country.
"For those who are brave enough i.e. Glencore, I think there are significant rewards in the DRC but can everybody operate there? Not really," Gait said.
Editing by Dale Hudson