Copper is groaning under a weight of expectation.
By any measure, demand is expected to far outstrip supply.
Mining companies attempting to find, define and mine copper with enough speed and precision to meet at least some of the demand required for decarbonisation targets, the EV market, power transmission networks and other industrial uses are facing environmental, geological, and government headwinds.
Failure to meet demand could easily cruel economic growth; there is no doubt that we are facing a copper supply crisis, it’s only the size of the crisis that varies.
And don’t be lulled into complacency by the likely short-term increase in copper production as some new mines begin production during 2022 and into 2023.
This supply sugar hit will come as global economies struggle to contain inflationary pressures, with government actions to rein in spending potentially flowing through to an easing in demand for electric vehicles and a reduction in economic growth generally.
With copper a barometer of industrial growth, demand may ease — but any demand dip will be short lived and there are not enough new mines under development to make up the supply shortfall when demand inevitably surges.
The issue that remains widely underappreciated outside the mining and associated sectors is the extent to which big copper resources are hard to find, and difficult to mine when they are discovered — and the long lag between exploration and production.
We have been looking for sizeable deposits for decades. We are consuming what we have found faster than ever, and we have not altered exploration methods or increased capital expenditure in response to the looming supply shortfall.
Recessionary risks and geopolitical uncertainty are adding to investor nervousness, reducing the likelihood of spending on the scale required to secure the next big copper mine.
Recent reports from the US and Canada suggest a reduction in copper production to 2026 among major miners.
A price dip is not helping, tempering the interest of mining companies to outlay the capital required for big projects.
Grade quality is decreasing, the ratio of waste to ore is increasing, and deposits if and when they are discovered are more likely to be deeper and in remote locations, presenting added costs around the provision of infrastructure to and at the mine.
Added to these geological and geographical challenges are Environmental, Social and Governance requirements which can extend the time between discovery and mining but as much as 15 years, depending on the jurisdiction.
Consultants Wood Mackenzie last month estimated that a US$23 billion investment a year is needed over 30 years to deliver new copper projects to reach zero-carbon targets.
In its report Red Metal, Green Demand Wood Mackenzie says that analysis shows that 9.7 million tonnes of new copper supply is needed over 10 years from projects yet to be sanctioned, equivalent to nearly a third of current refined consumption, if the industry is to meet the Paris Climate Agreement targets.
There is merit in Freeport McMoRan’s call for US Government to add copper to its official list of critical minerals.
A recent S&P Platts report said that if copper shortfalls follow projected trends, climate goals would be “short-circuited and remain out of reach”.
BloombergNEF says copper demand is expected to increase 53 per cent by 2040, against an increase in supply of just 16 per cent.
This alarming outlook is why IMDEX is supporting Copper for Tomorrow, a dedicated cooperative research centre established to focus on research and development priorities to solve challenges across the copper value chain.
The aim is to solve the copper paradox – how to produce the copper needed for a low carbon society while dealing with lower grade ores, without using more energy and water, and producing more waste.
It will do this through new research and technology that will:
IMDEX is invested in finding answers to modern mining challenges. Our commodity agnostic geoscience-lead solutions seek to provide answers that unravel complex ore bodies, allowing for more informed decisions to be made earlier.
This data-rich decision making is important for all minerals in today’s challenging mining environment but even more so with copper.
The difference between success and failure, between an economic and uneconomic deposit, is greater ore body knowledge, which will deliver improved processing intensity, less waste, less tailings, less water use, and greater overall efficiencies.
Mining companies able to access reliable data as early as possible at each step of the mining value chain from exploration and drilling, to planning and production, will be in the best position to meet the challenges.
It won’t solve the supply deficit, but it may help to ease it — and may unlock some of the world’s stranded copper assets.
IMDEX is a leading global Mining-Tech company, which enables successful and cost-effective operations from exploration to production. The ASX listed company develops cloud-connected sensors and drilling optimisation products to improve the process of identifying and extracting mineral resources for drilling contractors and resource companies globally. IMDEX’s unique end-to-end solutions for the mining value chain integrate its leading AMC and REFLEX brands. Together they enable clients to drill faster and smarter, obtain accurate subsurface data and receive critical information in real-time.
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