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Nov 16,
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Copper, the versatile and indispensable metal, has played a pivotal role in various aspects of human civilization for centuries. With its exceptional electrical conductivity, thermal resistance, and corrosion resistance, copper has become a vital component in industries ranging from electronics and construction to renewable energy and transportation.
As the demand for this valuable metal continues to soar, the global copper mining industry has witnessed significant growth, propelled by several key players.
In this article, we delve into the world of copper mining, unveiling the top 10 companies that have emerged as leaders in this dynamic sector. These companies have not only demonstrated their prowess in extracting copper from the earth's crust but have also contributed to technological advancements, sustainability initiatives, and community development.
From massive open-pit mines to underground operations, these copper mining giants have invested heavily in state-of-the-art technologies, efficient extraction methods, and responsible environmental practices. Their unwavering commitment to quality, safety, and sustainable mining practices has earned them a prominent position in the industry and the admiration of stakeholders worldwide.
Throughout this article, we will explore the key factors that have propelled these companies to the top of the copper mining industry. We will delve into their production capacities, geographical footprint, technological innovations, and their efforts to navigate the challenges posed by environmental concerns and market fluctuations.
By gaining insights into the operations and strategies of these industry leaders, we can better understand the current landscape of copper mining and appreciate the crucial role it plays in our everyday lives.
Whether you are an investor seeking opportunities, a mining enthusiast, or simply intrigued by the intricate world of copper extraction, this article will provide you with a comprehensive overview of the top 10 copper mining companies and their contributions to the industry.
So, let's embark on this exploration of the leading forces shaping the copper mining landscape, uncovering the companies that drive innovation, sustainability, and economic growth in this vital sector.
Codelco, also known as the Chilean Copper Corporation, is the world's largest copper mining company. It is a state-owned enterprise based in Chile and has a significant impact on the global copper industry. Codelco's operations are primarily focused on the exploration, development, production, and marketing of copper and its by-products.
Founded in , Codelco plays a crucial role in Chile's economy, accounting for a significant portion of the country's GDP and export revenues. The company is responsible for the majority of Chile's copper production, making it a vital player in the global market. Codelco's mining activities are spread across several regions in Chile, including the northern regions of Antofagasta and Atacama, where some of the world's largest copper deposits are located.
Codelco operates several world-class copper mines, including Chuquicamata, El Teniente, Radomiro Tomic, Gabriela Mistral, and Salvador. These mines contribute to Codelco's substantial copper output, ensuring a steady supply of the metal to meet global demand. The company employs advanced mining techniques and technologies to extract copper ore efficiently and sustainably.
One of Codelco's flagship mines is Chuquicamata, located in the Atacama Desert. It is one of the world's largest open-pit copper mines and has been in operation for over a century. Chuquicamata's rich copper deposits have played a significant role in Chile's copper industry and economy. In recent years, Codelco has been transitioning Chuquicamata from an open-pit mine to an underground operation to access deeper copper reserves.
El Teniente is another important mine in Codelco's portfolio. Located in the Andes Mountains, it is the world's largest underground copper mine. El Teniente has been in operation for over a century and has continually adopted innovative mining techniques to maintain its productivity and sustainability.
Codelco is committed to environmental stewardship and sustainability. The company strives to minimize its environmental impact, conserve water resources, reduce greenhouse gas emissions, and promote biodiversity in its mining operations. Codelco also invests in research and development to improve mining technologies and processes, aiming for greater efficiency and reduced environmental footprint.
As a state-owned enterprise, Codelco is an essential contributor to Chilean society. The company's profits are reinvested in the country's development, including education, healthcare, and infrastructure projects. Codelco also supports local communities near its mining operations, implementing social programs and initiatives to enhance living conditions and promote sustainable development.
Codelco is a globally significant copper mining company based in Chile. With its extensive operations and world-class mines, the company plays a crucial role in meeting global copper demand. Codelco's commitment to sustainability, technological innovation, and social responsibility positions it as a leader in the copper industry.
Freeport-McMoRan Inc. is a leading copper mining company based in the United States. It is one of the largest publicly traded copper producers globally and has a diverse portfolio of mining assets. Freeport-McMoRan's operations span across several countries, with a strong presence in the Americas, including the United States, South America, and Indonesia.
The company's roots can be traced back to , when the original Freeport Sulphur Company was founded. Over the years, Freeport-McMoRan has grown through mergers, acquisitions, and strategic partnerships. In , it merged with McMoRan Oil & Gas Company, creating the current entity, Freeport-McMoRan Inc.
As a copper mining company, Freeport-McMoRan focuses on the exploration, development, and production of copper, as well as other metals such as gold and molybdenum. The company's mining operations are characterized by both open-pit and underground mining methods, depending on the specific deposit and location.
One of Freeport-McMoRan's flagship assets is the Grasberg mine, located in Papua, Indonesia. It is one of the world's largest copper and gold mines and has been in operation for several decades. The Grasberg mine is a joint venture between Freeport-McMoRan and PT Indonesia Asahan Aluminium (Inalum). Its significant copper reserves and high production volume contribute significantly to Freeport-McMoRan's overall output.
In addition to the Grasberg mine, Freeport-McMoRan operates several other key mines, including the Morenci mine in Arizona, USA, and the Cerro Verde mine in Peru. These mines have substantial copper reserves and employ advanced mining technologies to ensure efficient extraction and processing.
Freeport-McMoRan places a strong emphasis on sustainability and responsible mining practices. The company strives to minimize its environmental impact by implementing various initiatives, such as water conservation, reclamation of land, and reducing greenhouse gas emissions. It also engages in community development programs to support the well-being of local communities near its mining operations.
Beyond its mining operations, Freeport-McMoRan is actively involved in research and development to enhance mining technologies and processes. The company aims to improve efficiency, reduce costs, and maximize resource recovery through innovation and continuous improvement.
As a significant copper producer, Freeport-McMoRan contributes to the economic development of the regions where it operates. The company creates employment opportunities, generates tax revenue, and supports local businesses. Additionally, Freeport-McMoRan invests in social and community programs, including education, healthcare, and infrastructure, to foster sustainable development and improve the quality of life for local communities.
Freeport-McMoRan Inc. is a prominent copper mining company based in the United States. With its diverse portfolio of mining assets and global presence, the company plays a vital role in meeting global copper demand. Freeport-McMoRan's commitment to sustainability, technological innovation, and community engagement positions it as a leading player in the copper industry.
Glencore plc is a prominent multinational commodity trading and mining company headquartered in Baar, Switzerland. While Glencore is involved in the production and trading of various commodities, including coal, oil, and agricultural products, it also has a significant presence in the copper mining industry.
Founded in as Marc Rich & Co., Glencore has grown into one of the world's largest diversified mining and trading companies. It operates across the entire value chain, from exploration and production to processing, smelting, refining, and marketing of copper and other commodities.
Glencore's copper mining operations are spread across various countries, including Chile, Peru, the Democratic Republic of Congo, and Zambia. These operations encompass both open-pit and underground mining methods, depending on the specific deposit characteristics and location.
In Chile, Glencore owns and operates the Altonorte smelter and refinery, which processes copper concentrates from its own mines and other sources. The company also has a significant stake in the Collahuasi copper mine, one of the largest copper deposits in the world, located in northern Chile.
Glencore's copper operations in Peru include the Antapaccay and Antamina mines. Antapaccay is an open-pit copper mine located in the southern part of the country, while Antamina is a joint venture mine that produces copper, zinc, and molybdenum.
The Democratic Republic of Congo (DRC) is another important region for Glencore's copper production. The company operates the Katanga Mining complex in the DRC, which includes the Kamoto and KOV open-pit mines and the Kamoto Concentrator and Luilu Metallurgical Plant. These operations contribute significantly to Glencore's global copper output.
Glencore places a strong emphasis on sustainable and responsible mining practices. The company is committed to minimizing its environmental impact, promoting health and safety, and respecting the rights and well-being of local communities. Glencore invests in environmental management systems, community development initiatives, and social programs to support the regions where it operates.
In addition to its mining operations, Glencore is a major player in commodity trading. The company leverages its extensive global network and market expertise to buy, sell, and distribute copper and other commodities. This integrated approach allows Glencore to optimize its supply chain, manage market risks, and capture value across various stages of the commodity lifecycle.
Glencore's role as a significant copper producer and trader contributes to the stability and growth of global copper markets. The company's extensive global reach, infrastructure, and expertise enable it to meet the diverse needs of customers worldwide.
Glencore plc is a multinational commodity trading and mining company based in Switzerland, with a significant presence in the copper mining industry. Through its diverse mining assets and integrated approach, Glencore plays a crucial role in the global copper market. The company's commitment to sustainability, responsible mining practices, and value creation position it as a key player in the mining and trading of copper and other commodities.
BHP, formerly known as BHP Billiton, is one of the world's largest mining companies and a significant player in the global copper industry. Headquartered in Melbourne, Australia, BHP operates in multiple countries and engages in the exploration, development, production, and marketing of various commodities, including copper.
BHP has a diverse portfolio of mining assets and operations across the globe. The company's copper mining activities are concentrated in Australia, Chile, Peru, the United States, and several other countries. BHP's copper mines encompass both open-pit and underground operations, depending on the specific deposit characteristics and location.
In Chile, BHP operates the Escondida mine, the world's largest copper mine. Located in the Atacama Desert, Escondida has vast copper reserves and produces a significant portion of Chile's copper output. BHP owns a majority stake in the mine and collaborates with other partners, including Rio Tinto and Mitsubishi Corporation, in its operation.
BHP's copper operations in Australia include the Olympic Dam mine, located in South Australia. Olympic Dam is one of the largest ore bodies in the world, containing significant copper, gold, uranium, and silver deposits. The mine utilizes both underground and open-pit mining methods to extract and process these valuable resources.
In addition to its mining operations, BHP is committed to sustainable and responsible mining practices. The company focuses on environmental stewardship, community engagement, and employee safety. BHP invests in innovative technologies and processes to minimize its environmental impact, conserve water resources, reduce emissions, and promote biodiversity.
BHP's role extends beyond copper mining. The company is involved in the production and marketing of other commodities, including iron ore, coal, petroleum, and nickel. Its integrated approach allows BHP to leverage its expertise and global network to optimize operations, manage risks, and capture value across different commodity markets.
As one of the largest mining companies globally, BHP contributes significantly to the economies of the countries where it operates. The company provides employment opportunities, generates tax revenue, and supports local businesses and communities. BHP also invests in social and community development programs, including education, healthcare, infrastructure, and environmental initiatives.
BHP is a leading mining company based in Australia with a substantial presence in the global copper industry. Through its diverse portfolio of mining assets, commitment to sustainability, and integrated approach, BHP plays a crucial role in meeting global copper demand.
The company's focus on responsible mining practices, community engagement, and value creation positions it as a significant player in the mining and production of copper and other commodities.
Southern Copper Corporation is a leading mining company primarily focused on the exploration, development, and production of copper and other minerals. Headquartered in Phoenix, Arizona, Southern Copper operates mines in several countries, with a primary focus on Peru and Mexico.
Founded in , Southern Copper has grown into one of the largest copper producers in the world. The company's mining operations encompass both open-pit and underground methods, depending on the specific deposit characteristics.
Southern Copper's flagship operation is the Toquepala mine in Peru. It is one of the largest copper mines globally, known for its significant copper reserves and high production volume. The Toquepala mine is an open-pit operation that utilizes modern mining technologies to extract and process copper ore.
Another key asset for Southern Copper is the Buenavista mine in Mexico. This mine comprises both open-pit and underground operations and is known for its substantial copper, molybdenum, and zinc reserves. The Buenavista mine contributes significantly to Southern Copper's overall production and serves as a vital source of copper for the company.
Southern Copper places a strong emphasis on sustainable mining practices and environmental stewardship. The company implements various measures to minimize its environmental impact, including water management, waste reduction, and reclamation of mined areas. It is committed to complying with relevant environmental regulations and working closely with local communities to ensure responsible mining practices.
Beyond copper, Southern Copper also produces other minerals, including molybdenum, zinc, silver, and lead. This diversification allows the company to leverage its expertise and capture value across multiple markets.
As a major copper producer, Southern Copper plays a vital role in meeting global copper demand. Copper is a crucial metal used in various industries, including construction, electronics, transportation, and renewable energy. Southern Copper's production contributes to the supply chain of these industries, supporting economic growth and development.
Southern Copper is committed to corporate social responsibility and community development. The company invests in social programs, education, healthcare, and infrastructure in the regions where it operates. By fostering sustainable development and improving the quality of life for local communities, Southern Copper aims to create shared value and positive long-term impacts.
Southern Copper Corporation is a leading mining company based in the United States, with a primary focus on copper production. Through its operations in Peru, Mexico, and other countries, the company plays a significant role in the global copper industry.
Southern Copper's commitment to sustainable practices, diversification, and community engagement positions it as a key player in the mining and production of copper and other minerals.
Antofagasta PLC is a British multinational mining company primarily focused on copper production. It is headquartered in London, United Kingdom, and operates several copper mines in Chile, where it has a strong presence.
Antofagasta traces its origins back to , when it was established as a mining company in Chile. Today, it is one of the largest copper producers in the world and has a diversified portfolio of mining assets.
The company's flagship operation is the Los Pelambres mine, located in central Chile. Los Pelambres is an open-pit copper mine known for its substantial copper reserves and high-quality ore. Antofagasta owns a majority stake in the mine and utilizes advanced mining technologies to extract and process copper ore efficiently.
Antofagasta also operates the El Tesoro and Centinela mines in Chile. El Tesoro is an open-pit mine that produces copper concentrate, while Centinela comprises both open-pit and underground mining operations. These mines contribute significantly to Antofagasta's copper production and form an integral part of its mining operations in Chile.
The company places a strong emphasis on sustainable mining practices and environmental stewardship. Antofagasta is committed to minimizing its environmental impact through the efficient use of resources, water management, and the implementation of mitigation measures. It also engages in community development initiatives and works closely with local communities to ensure the well-being of the regions where it operates.
Beyond copper, Antofagasta has interests in other minerals, including gold and molybdenum. This diversification allows the company to leverage its expertise and capture value from multiple commodities.
Antofagasta's copper production plays a crucial role in meeting global copper demand, as copper is a vital metal used in various industries, including construction, electronics, and renewable energy. The company's operations contribute to the global supply chain and support economic growth and development.
As a responsible corporate citizen, Antofagasta invests in social programs, education, healthcare, and infrastructure in the communities near its mining operations. The company aims to create sustainable benefits and improve the quality of life for local communities.
Antofagasta PLC is a British multinational mining company with a primary focus on copper production. Through its operations in Chile, the company is a significant player in the global copper industry. Antofagasta's commitment to sustainable practices, diversification, and community engagement positions it as a key player in the mining and production of copper and other minerals.
Jiangxi Copper Corporation Limited is a leading Chinese mining and metallurgical company primarily engaged in the exploration, mining, smelting, and refining of copper. It is headquartered in Nanchang, Jiangxi Province, China, and is one of the largest copper producers in the country.
Founded in , Jiangxi Copper has grown into a major player in the global copper industry. The company operates several mining and processing facilities in China, with a focus on copper production and related by-products.
Jiangxi Copper's mining operations encompass both open-pit and underground methods, depending on the specific deposit characteristics. The company has a diverse portfolio of mining assets across China, including the Dexing Mine, the largest open-pit copper mine in China, and the Yinshan Mine, which has significant copper and gold reserves.
In addition to mining, Jiangxi Copper has integrated smelting and refining operations. The company operates multiple smelters and refineries in China, where it processes copper concentrates and produces refined copper, copper cathodes, and other copper products. Jiangxi Copper's smelting and refining facilities utilize advanced technologies to ensure efficient and environmentally responsible operations.
Jiangxi Copper is committed to sustainable development and environmental protection. The company implements rigorous environmental management practices and invests in technologies to reduce emissions, conserve resources, and minimize its ecological footprint. It also engages in community development programs and social initiatives to support the well-being of the communities near its operations.
Beyond copper, Jiangxi Copper is involved in the production of other non-ferrous metals, including gold, silver, and rare metals. The company's diversification allows it to capture value from multiple commodities and leverage its expertise in the broader metals industry.
As one of the largest copper producers in China, Jiangxi Copper plays a significant role in meeting domestic and global copper demand. Copper is a crucial metal used in various industries, including construction, electronics, and transportation. The company's production contributes to the supply chain of these industries and supports economic growth and infrastructure development.
Jiangxi Copper is actively expanding its global presence through strategic investments and partnerships. The company has interests in copper projects and joint ventures in various countries, including Peru, Mongolia, and the Democratic Republic of Congo, further strengthening its position in the global copper market.
Jiangxi Copper Corporation Limited is a Chinese mining and metallurgical company focused on copper production. With its extensive mining and processing operations, commitment to sustainability, and global expansion efforts, Jiangxi Copper plays a significant role in the mining, smelting, and refining of copper and other non-ferrous metals.
First Quantum Minerals Ltd. is a Canadian-based mining and metals company engaged in the exploration, development, and production of copper, nickel, gold, and other base metals. The company is headquartered in Vancouver, British Columbia, Canada.
First Quantum Minerals has a diverse portfolio of mining assets located in several countries, including Zambia, Mauritania, Australia, Finland, Spain, Turkey, and Panama. The company's primary focus is on copper production, but it also produces other metals as by-products of its operations.
One of First Quantum Minerals' key assets is the Kansanshi mine, located in Zambia. Kansanshi is one of the largest copper mines in Africa and utilizes both open-pit and underground mining methods. The mine has significant copper reserves and produces copper concentrate, which is further processed into copper cathodes for sale.
Another notable operation for First Quantum Minerals is the Cobre Panama mine, located in Panama. Cobre Panama is a large-scale copper project that includes an open-pit mine, processing facilities, and associated infrastructure. The mine has a substantial copper deposit and contributes to the company's copper production.
First Quantum Minerals places a strong emphasis on responsible mining practices and sustainable development. The company strives to minimize its environmental impact through the efficient use of resources, waste management, and reclamation of mined areas. First Quantum Minerals also engages with local communities to foster social and economic development and promote long-term benefits.
In addition to copper, First Quantum Minerals produces nickel, gold, and other metals as by-products. The company leverages its diversified operations to capture value from multiple commodities and optimize its overall production and revenue.
As a significant copper producer, First Quantum Minerals contributes to meeting global copper demand. Copper is a vital metal used in various industries, including construction, electronics, and renewable energy. The company's operations support the global supply chain and contribute to economic growth and infrastructure development.
First Quantum Minerals is committed to maintaining strong health and safety standards at its operations. The company prioritizes the well-being of its employees and implements robust safety protocols to ensure a safe working environment.
First Quantum Minerals Ltd. is a Canadian mining and metals company with a focus on copper production. Through its diversified portfolio of mining assets and commitment to sustainability, the company plays a significant role in the global mining industry.
First Quantum Minerals' operations contribute to the supply of copper and other metals, supporting economic development and meeting the demand for key industrial materials.
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Grupo México is a Mexican conglomerate and one of the largest mining companies in Mexico. The company is involved in various sectors, including mining, transportation, infrastructure, and logistics. Its headquarters are located in Mexico City.
Grupo México's primary focus is on copper mining and production. The company operates several mines in Mexico, Peru, and the United States. Its flagship operation is the Buenavista del Cobre mine, located in the state of Sonora, Mexico.
The Buenavista mine is one of the largest open-pit copper mines in the world and is known for its significant copper reserves. Grupo México also operates the La Caridad and IMMSA complexes, which contribute to its overall copper production.
In addition to copper, Grupo México is involved in the production of other minerals, including molybdenum, silver, zinc, and lead. The company's diverse portfolio of mining assets allows it to leverage its expertise and capture value from multiple commodities.
Apart from mining, Grupo México operates Ferromex, the largest railway company in Mexico. The railway network plays a crucial role in transporting Grupo México's mining products, as well as providing transportation services for other industries. Grupo México's transportation division also includes Ferrosur and Intermodal México, further expanding its logistics capabilities.
Grupo México places a strong emphasis on safety, environmental stewardship, and community engagement. The company implements rigorous safety protocols at its operations and invests in technologies and practices to minimize its environmental impact. Grupo México also engages in community development initiatives, supporting education, healthcare, and infrastructure projects in the regions where it operates.
As a major copper producer, Grupo México contributes significantly to meeting global copper demand. Copper is a vital metal used in various industries, including construction, electronics, and renewable energy. Grupo México's production supports economic growth and infrastructure development, both domestically and internationally.
Grupo México is a Mexican conglomerate with diverse operations in the mining, transportation, infrastructure, and logistics sectors. As a prominent copper producer and mining company, Grupo México plays a significant role in the global mining industry.
The company's commitment to safety, environmental responsibility, and community development positions it as a key player in the extraction and production of copper and other minerals.
Hudbay Minerals Inc. is a Canadian mining company headquartered in Toronto, Ontario. The company is primarily engaged in the exploration, development, and production of base and precious metals, including copper, gold, and zinc. Hudbay Minerals operates mines and processing facilities in Canada, Peru, and the United States.
Hudbay Minerals' flagship operation is the Constancia mine, located in Peru. The Constancia mine is a large-scale open-pit copper mine that produces copper concentrate.
The company also owns and operates the Lalor mine in Manitoba, Canada, which produces zinc and gold concentrates. Additionally, Hudbay Minerals has ownership interests in the 777 mine in Manitoba and the Rosemont project in Arizona, both of which have significant copper and other mineral reserves.
The company places a strong emphasis on responsible mining practices, environmental stewardship, and community engagement. Hudbay Minerals is committed to minimizing its environmental impact through sustainable practices, land reclamation, and water management. The company also actively engages with local communities, supporting social and economic development initiatives and fostering positive relationships.
Beyond mining operations, Hudbay Minerals has exploration projects aimed at discovering and developing new mineral deposits. The company invests in exploration activities to expand its resource base and identify potential future mining opportunities.
Hudbay Minerals is actively involved in the global metals market, supplying copper, gold, zinc, and other minerals to various industries. Copper, in particular, is a key metal used in construction, electronics, and renewable energy technologies. The company's production contributes to the global supply chain, supporting economic growth and infrastructure development.
Hudbay Minerals is committed to maintaining high health and safety standards at its operations. The company prioritizes the well-being of its employees and contractors and implements robust safety protocols and training programs.
Hudbay Minerals Inc. is a Canadian mining company with a focus on the exploration, development, and production of base and precious metals. With its diverse portfolio of mining assets, commitment to responsible practices, and community engagement efforts, Hudbay Minerals plays a significant role in the mining and production of copper, gold, zinc, and other minerals.
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.07.20
Capital inputs account for about half the total costs of mine production ' the average for the economy as a whole is 21%.
Mining is an extremely capital-intensive business for two reasons. First, mining has a large up-front layout of construction capital called capex ' the costs associated with the development and construction of open-pit and underground mines. There is often other company-built infrastructure like roads, railways, bridges, power-generating stations and seaports to facilitate extraction and shipping of ore and concentrate. Second, there is a continuously rising opex, or operational expenditures. These are the day-to-day costs of operation: rubber tires, wages, fuel, camp costs for employees, etc.
Copper mining has become an especially capital-intensive industry ' the average capital intensity for a new copper mine in was between US$4,000-5,000 to build the capacity to produce a tonne of copper, in capital intensity was $10,000/t, on average, for new projects. Today, building a new copper mine can cost up to $44,000 per tonne of production, an AOTH analysis has found.
Capex costs are escalating because:
The bottom line? It is becoming increasingly costly to bring new copper mines online and run them.
Capital intensity
The initial capital expense (capex) of building a mine is high. All the low-hanging fruit has been mined. Companies have to go further afield to find deposits. The deposits now being mined are getting older; the metallurgy is more complex and grades are going down. In it cost $4,000-5,000 on average to build the infrastructure to produce a tonne of copper. Now that number is north of $12,000/tonne.
Some examples:
(One large mine to buck this trend is Ivanhoe Mines' Kamoa-Kakua copper mine which started commercial production last year. The world's highest-grade major copper mine is expected to produce 200,000 tonnes of copper per year in the first phase, doubled to 400,000 tpa after Phase 2. Kamoa's production measured against a relatively low capex for its size, $1.3 billion, gives it a capital intensity of just $6,500/t ($1.3B/200,000t)
It's interesting to assess the capex cost of production for two copper mines that opened in British Columbia in recent years ' the Copper Mountain mine near Princeton, and the Red Chris mine in northwestern BC's 'Golden Triangle'. Because these mines are smaller and cannot benefit from economies of scale, such as Kamoa, Cobre Panama and Oyu Tolgoi,their capex costs per tonne are quite high.
Opened in , Copper Mountain was designed to produce 49 million kilograms (108 million pounds) of copper, 850,485 grams (30,000 ounces) of gold and almost one million grams (350,000 ounces) of silver annually. In its first year of production, the $441 million mine produced 10,024 tonnes of copper, leaving an 'off the charts' capital intensity of $43,994 per tonne.
Imperial Metals' Red Chris mine started in and in its first year produced nearly 40,000 tonnes of copper. At a capex of $669 million, Red Chris' capex cost per tonne of production was $16,725.
(We see the same higher-cost scenario with nickel, except a few degrees worse. Capital intensity for new nickel mining has gone through the roof. The discrepancy between the initial per-pound capital cost of nickel projects and the ultimate construction cost is over 50%. Larger-scale projects have not demonstrated lower per-unit capital costs. Sometimes large projects have even higher capital intensity.
Global nickel supply is increasingly coming from laterite nickel deposits, which require high-pressure acid leach (HPAL) plants. We are now looking at north of $35 per pound capital intensity as we move into these multibillion-dollar ferronickel and HPAL projects. Several are in Indonesia, which aims to become a global hub for battery metals mining, processing and electric-vehicle assembly, thanks to billions worth of investment from China)
Last fall Fitch Solutions put out a report primarily of interest for what it said about Chile. While the country has attracted substantial mining investment in recent years, including from leading copper producers like BHP and Teck, in the longer term, Chile's declining ore grades present a key downside risk to production forecasts. The chart below shows Chile's average copper grades more than cut in half between and , from 1.41% Cu to 0.65% Cu.
Source: CochilcoAs ore grades decline, higher amounts of ore need to be processed, to yield an equivalent amount of copper.
Chile is also producing less copper. According to Cochilco, the country's state copper commission, in Chile produced 34.7% of the world's copper; by , the percentage had fallen to 26.7% (the USGS's latest figures show Chilean mine production at 26% of the global total)
Making matters worse, after more than a decade of drought, freshwater supplies are becoming a big problem in Chile. Copper mines there require lots of water to process sulfide ores, and the lower the grade, the more water must be used.
Since major copper miners are increasingly turning to low-grade sulfide deposits to beef up their production, their water consumption is expected to jump up to 20.9 cubic meters per second (about half an average home pool). Water scarcity hinders their ability to produce, and drives mining costs per tonne higher.
The country's left-ward shift is another mark against the top copper producer as far as attracting mining investment. Chile's environmental commission of the Constitutional Convention has just approved a rule for inclusion in the new Constitution that would nationalize 'strategic assets' including lithium, copper and precious metals. The rule states, 'there will be no place for any compensation for the rights over mining and hydrocarbon assets, since by Constitutional mandate they belong to the State of Chile.'
It is therefore no surprise that none of the projects on Fitch's top 10 copper projects by capex are in Chile. For the others, capital intensity continues to rise. In first place is Seabridge Gold's KSM project in British Columbia, with an eye-watering capex of $12.1 billion. Second is the above-mentioned expansion at Oyu Tolgoi, anticipated to cost $11.2B total including $7B of underground development; SolGold and Cornerstone Resources' jointly-held Cascabel project in Ecuador places third with a capex allocation of just over $10 billion; followed by the Freida River project in Papua New Guinea ($7.8B), MMG's Izok Corridor in Canada's Bathurst Inlet ($6.5B), Teck's Galore Creek in British Columbia ($6.1B) Alcantara Group's Tampakan project in the Philippines ($5.9B), Kaz Minerals' Baimskya project in Russia ($5.5B), and Antofagasta's Twin Metals project in Minnesota. (the latter project looks unlikely to proceed, following the US government's decision earlier this year to cancel leases held for the group's proposed copper and nickel mine near Minnesota's Boundary Water region).
It's worth asking how high the copper price needs to go to make these projects viable. Recall that when copper mines were being commissioned a decade ago, the capital intensity for new copper projects was about $10,000/t. The average monthly copper price per tonne topped out in at $8,828/t. In other words, despite a record-high copper price that year, the capex cost to mine a tonne of copper exceeded the price received. Prices declined after to $4,868 monthly average price per tonne in before partially recovering in to $6,530. Prices dipped in with the onset of the pandemic, but quickly recovered. From Statista, we learn that in , the average price of copper was $9,322/t. Copper's new record-high, set in May , was $10,512, a 130% increase over March, .
However, the cost to build a new mine, outlined in the several examples above, is in most cases higher even than copper's best-ever price of $10,512/t, or $4.76/lb, and certainly a lot more than copper's current (July 19) price of $7,162 per tonne ($3.24/lb).
Source: KitcoCosts per tonne rising
As mentioned at the top, copper mining is not only getting more expensive due to rising capital costs, such as building new roads, railways, bridges, power-generating stations and processing facilities, but increasing day to day expenditures, known in industry parlance as 'opex'.
In a March report, Bank of America said the costs of a number of key inputs have risen dramatically from their pandemic lows. They include a 350% increase in the cost of fuel, a more than 600% rise in sulfuric acid in Chile, a 300% increase in steel and a 400% increase in spot LNG in Europe.
Again it's worth looking at Chile, the world's biggest copper producer, to get an idea of where costs are at, and likely heading.
In the graph below from Cochilco, note that in , copper could be mined in Chile for US$68 per pound; by costs had more than tripled to $211.80/lb.
Source: Cochilco and Wood Mackenzie, Q3Among the cost items that went up between and , the most significant was labor, an increase of 35.1%, other consumables @ +24.3%, services & contractors (+20.2%), power (+9.9%), sulfuric acid (+5%) and diesel @ +4%.
Source: CochilcoAccording to Cochilco, via BN Americas, Chile's copper output fell 1.9% to 5.63Mt in due to higher operational costs and lower grades.
Of 22 large copper mining operations in the Cochilco study, 16 posted an increase in cash costs. The average for all 22 mines @ US$132.80 per pound last year, an increase of 10 cents/lb over . The main factors were higher prices for energy, fuel, freight and sulfuric acid.
Bloomberg reports that mining companies are likely to see a drop in profits following record earnings, amid mounting cost pressures and slowing Chinese growth. A February article cited the world's top two miners, BHP and Rio Tinto, saying that a lack of workers in key roles is having an impact on their operations. Australia-focused Fortescue Metals reported in January that its costs had risen 20% over the past 12 months driven primarily by rising fuel prices and labor shortages.
Conventional vs oxide/ chalcocite processing
Another variable that must be considered when evaluating copper opex, is the type of ore being produced. Mines that produce electro-refined copper via conventional mining/ concentration/ smelting/ refining will pay a much higher cost per pound (or kilogram) than electrowinning copper cathodes from oxide and chalcocite ores. The former has costs ranging from $1-2 per kilogram, compared to $3-6 per kg for the latter. Moreover, copper extraction is said to be profitable when the selling price of copper is above $6 per kg ($6,000/tonne) and unprofitable when the price falls below $3,000/tonne. At a current price of $7,162 per tonne (3.24/lb or $7.16/kg), copper miners should all be booking profits. According to Fast Markets, Mining companies traditionally refer to a $3-per-lb copper ($6,614 per tonne) price as a floor to spur new investment.
Supply lagging demand
With copper prices well into the profitability range, one would think that the market would be flooded with new supply, as even the most marginal producers jump in with new tonnage, to capitalize on high prices. As the 5-year chart below shows, even though spot copper has skidded from peaks in May and October, of ~$4.70/lb, the current $3.25/lb is still the highest copper has been since November .
Source: KitcoS&P Global Market Intelligence predicts that due to a shortage of projects, supply will lag demand in the long term.
While the New York-based analytics firm expects mined copper production to rise to 26.14Mt in , from 21.16 Mt in , that will not prevent a supply gap in the post- years.
That's because, as demand for copper in manufactured goods and housing has surged, supply has not kept up.
According to CME Group, there has been a much lower growth in copper supply over the past 25 years compared to say, aluminum and iron ore:
Since , copper mining supply has doubled while the supplies of other metals have tripled.
Mined copper supply has grown more slowly than other metals over the past quarter-century.
As previously reported, global mined copper production will drop from the current 20Mt to below 12Mt by , resulting in a supply shortfall of 15Mt. By then, over 200 copper mines are expected to run out of ore, with not enough new mines in the pipeline to take their place.
Graph courtesy of Hamish Sampson / Analyst at CRU's Copper TeamProduction from existing copper mines, including concentrate and solvent extraction-electrowinning, is expected to increase at a CAGR of 1.0% in -25 but fall at a CAGR of 4.7% in -30, driven by declining ore grades and mine closures.
These mines include Glencore's 33.75%-owned Antamina (BHP 33.75%, Teck Resources 22.5%, Mitsubishi 10%), Codelco's Radomiro Tomic and Teck's Highland Valley.
As a result, production from existing operating mines ' not considering those assets that are starting up, project expansions or mine restarts ' is projected to fall to 15.90Mt in from 20.53Mt in .
Expected copper deficit in . Source: S&P Global Market IntelligenceDiminished supply from operating mines, combined with the projected increase in demand for copper over -, could result in a 3.85Mt production shortfall in , according to S&P Global estimates.
The refined copper market will also move into a 279,000-tonne deficit by , from a 142,000-tonne surplus in , S&P Global adds.
From to , the copper industry will be unable to meet a growing demand for concentrate, even when including uncommitted development-stage projects that could potentially move forward and start up during this period, S&P Global says.
Global copper output -30. Source: S&P Global Market IntelligenceDwindling copper reserves and lower ore grades at some of the world's largest mines also mean that new deposits would only be replacing existing output, thus not contributing to supply growth.
The solution, as simple as it sounds, is to have more copper projects that can be developed into producing mines. S&P Global has identified 14 probable and 26 possible projects in the copper pipeline, though the firm admits it's unlikely that all will come to fruition.
Therefore, given copper's increasing demand from the EV and renewable energy sectors, more action from the mining industry is imperative to close the supply gap.
S&P Global estimates that new copper discoveries have fallen by 80% since .
As of now, the global copper cupboard is quite bare. To even have a chance at net-zero emissions, at least 19Mt of additional metal must be delivered by , the equivalent of one new Escondida mine (1Mt annual production) every year.
A major rise in copper demand from new 'blacktop' infrastructure (think roads, bridges, airports, etc.), combined with high demand for copper from large-scale efforts on behalf of governments to decarbonize and electrify, is not being met with an adequate supply of the industrial metal. Trillions worth of new projects are thus in danger of falling by the wayside unless much more copper is discovered ' more than is currently possible, in my opinion.
A recent report from S&P Global predicts the world's appetite for copper will reach 53 million tonnes, on an annual basis, by mid-century. This is more than double current global mine production of 21Mt, according to the US Geological Survey.
How are we going to find the copper?
As capex and opex for new copper mines and expansion projects continue to rise, the gap between expectations of new copper supply and reality is likely to keep growing. This week we had two more events take place that are likely to worsen the copper supply-demand balance. The first was another move forward in the Chilean government's quest to nationalize the mining industry. If this happens, and it looks like it will, I have no doubt that we will see a mass exodus of minerals investment from Chile, and likely Peru, the next domino to fall.
The second event was a decision in Congo to suspend metal exports from Tenke Fungurume, a large copper-cobalt mine owned by China's CMOC.
The demand to halt exports came from a court-appointed administrator, who was appointed in February to run the mine for six months, in response to a lawsuit by Congolese miner Gecamines, which holds a minority stake in Tenke Fungurume. Gecamines alleges that CMOC understated the mine's reserves to reduce royalties it pays to Gecamines. CMOC denies the allegation. The administrator demanded that CMOC suspend export of its production because CMOC and Gecamines had not reached agreement on how to sell the mine's output. (Reuters).
Congo is the world's top producer of cobalt and Africa's leading copper-mining country. Tenke Fugurume accounted for more than 10% of global cobalt output in .
Conclusion
The copper market is tight based on a combination of factors including lower ore grades, droughts/ lack of fresh water, resource nationalism in top producers Chile and Peru, and a dearth of new discoveries in recent years. To avoid a copper shortage as early as , billions will need to be spent on discovering new copper deposits.
In 20 years, BloombergNEF says copper miners need to double the amount of global copper production, just to meet the demand for a 30% penetration rate of electric vehicles ' from the current 21Mt a year to 40Mt.
Copper consumption by green energy sectors globally is expected to jump five-fold in the 10 years to , data from consultancy CRU Group shows.
The most recent report from S&P Global, 'The Future of Copper: Will the looming supply gap short-circuit the energy transition?', published earlier this month, concludes that, 'unless massive new supply comes online in a timely way, the goal of Net-Zero Emissions by will be short-circuited and remain out of reach.'
The report goes on to say that 'copper scarcity may emerge as a key destabilizing threat to international security. Projected annual shortfalls will place unprecedented strain on supply chains. The challenges this poses are reminiscent of the 20th-century scramble for oil but may be accentuated by an even higher geographic concentration for copper resources and the downstream industry to refine it into products.'
S&P therefore argues the world will need to develop many large new copper mines, about three 'Tier 1' mines per year for the next 29 years, to have enough new copper to achieve the lofty goals of net-zero carbon emissions.
At AOTH, we are paying close attention to companies that hold highly prospective copper projects that could help to alleviate the coming supply shortage, and contribute to the global copper supply chain that is an essential part of the shift to decarbonization and electrification.
Richard (Rick) Mills
aheadoftheherd.com
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