Modern Mining December 2022

COMMODITIES OUTLOOK – COPPER

The trouble with copper By Dr Dave Lawie IMDEX chief geoscientist

C opper is groaning under a weight of expec tation. By any measure, demand is expected to outstrip supply by far. 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 governmental headwinds. Failure to meet demand could easily crimp eco nomic growth; there is no doubt we are facing a copper supply crisis; it is only the size of the crisis that could vary. And, don’t be lulled into compla cency 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 econo mies struggle to contain inflationary pressures, with government actions to rein in spending potentially flowing through to an easing in demand for elec tric 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 explo ration methods or increased capital expenditure in response to the looming supply shortfall. Recessionary risks and geo

Dr Dave Lawie IMDEX chief geoscientist.

political uncertainty are adding to investor nervousness, reduc ing 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 chal lenges are Environmental, Social and Governance requirements which can extend the time between discovery and mining by as much as 15 years, depending on the jurisdiction.

BloombergNEF says copper demand is expected to increase 53 per cent by 2040.

12  MODERN MINING  December 2022