Copper mine expansion needed to meet electrification goals

The number of copper mines globally would need to increase by 55% to meet electrification transition goals, a new report published by the International Energy Forum has found.  

To support current trends, 115% more copper would need to be mined over the next 30 years than what has been mined historically, the report showed.

It highlighted the need for greater investment in the discovery and development of new copper mines to meet governments’ aims for transitioning from internal combustion engine vehicles to electric vehicles, which require about 83 kilograms of copper per car according to the International Copper Association.

Big miners are paying attention. Just this week BHP and Lundin announced a deal to acquire Filo Mining, a TSX-listed South American copper miner with the Filo del Sol copper project in Chile.

The C$4.5 billion acquisition is not just about expanding BHP and Lundin's asset base but also about positioning themselves strategically within the copper market.

Analysts, too, remain bullish on copper over the medium to long term as an electrification-driven supply crunch takes hold.

“There is risk of further weakness in the near-term due to cyclical factors, but we continue to be bullish copper over the medium-term due to growing global demand, potentially led by the US, and serious supply constraints,” analysts at Jefferies wrote in a note dated July 21. 

UBS analysts highlighted that many major copper miners’ Q2 production results have signalled ongoing supply constraints amid weaker-than-expected demand, with output at the low end of guidance or missing it entirely. 

Copper at ‘attractive entry point’

Copper's current price at about $9,000 per ton is an attractive medium-term entry point for investors to consider, the UBS analysts believe. 

“The rally and subsequent meltdown in the copper market is evidence how quickly the positioning tide can turn,” they wrote. “So, we see a cooling of speculative momentum, with cyclical and policy-related disappointments to blame for the setback, rather than any significant change in our positive medium-term outlook.” 

Meanwhile, Citi analysts see copper prices rising to $9,500 per ton by the fourth quarter, hitting $11,000 per ton by early 2025 on a Fed-rate-cuts-led recovery in global manufacturing sentiment and inventory deficits in the second half of 2024. 

“We think consumer buying limits further downside, but investors will likely need time and stronger physical and financial data to resume copper buying,” they wrote.

Chilean players look to extend life of assets

To boost supply, producing miners are optimizing their copper assets to extend their lifetime.

In Chile, BHP Group Ltd (LSE:BHP, ASX:BHP) recently completed a $2.5 billion expansion of its Spence copper mine, which included constructing a concentrator plant to increase production and extend the life of the deposit by about 50 years. This week the company celebrated three months of Spence being its first fully autonomous operation, moving 80 million tons of material without any safety incidents during this period. 

The ramp up of production at Teck Resources Ltd (TSX:TECK.B)'s Quebrada Blanca (QB) mine saw the company achieve record copper production in Q2. QB produced 51,300 tons, with total production across all of the company’s copper assets coming in at 110,400 tons. 

Meanwhile, Los Andes Copper Ltd (TSX-V:LA) (Los Andes Copper Ltd (TSX-V:LA)'s Vizcachitas copper-molybdenum porphyry project is set to be the country’s next major copper mine, according to a prefeasibility study demonstrating a 26-year open pit operation targeting 136,000 tons per day.

Canada: a hive of copper production and exploration activity

In Canada, Teck is proceeding with its Highland Valley Copper Mine Life Extension project, which it hopes would yield nearly two million tonnes of additional copper over the life of the British Columbian project.

Also in BC, Taseko Mines is looking to accelerate production at the Gibraltar Mine, the second largest open-pit copper mine, after operations last quarter were impacted by mill maintenance activities and an 18-day workers’ strike. Full-year copper production is expected to be in the range of 100 to 115 million pounds. 

Fabled Copper Corp. (CSE:FABL) is developing its portfolio of copper properties in the province, and this summer is focused on drilling at its Muskwa project, comprised of the Neil, Toro, and Bronson properties, after receiving the required permit late last year.

Also exploring for copper in BC is Kodiak Copper Corp. (TSX-V:KDK, OTCQB:KDKCF) with its flagship MPD copper-gold project. The company has been leveraging an AI-powered targeting system VRIFY AI to identify new drill targets at the property for this year’s 10,000-meter drill program.

Torr Metals (TSX-V:TMET) recently expanded its Kolos copper-gold project in BC by 75% ahead of its summer 2024 field season. Exploration is focused on multiple targets, including a recently discovered mineralized outcrop in the Vik Zone. 

At the Trident and Pinnacle copper-gold projects, also located in BC, Pacific Empire Minerals Corporation (TSX-V:PEMC, OTCQB:PEMSF) recently wrapped up an airborne MobileMT (MagnetoTelluric) survey. Data obtained will be used to identify and prioritize drill targets for a summer/fall program. 

Across the country in Quebec, QC Copper and Gold Inc. (TSX-V:QCCU, OTCQB:QCCUF) is working with the Chapais community to support the responsible development of its Opémiska project. The company earlier this year released an updated technical report, which substantially increased the measured and indicated mineral resources at the project to 2.09 billion pounds of copper equivalent.

Falcon Gold Corp (TSX-V:FG, OTC:FGLDF) is preparing to kick off a drill program at its Burnt copper project in Newfoundland, located near the Benton Resources-Spruce Ridge Great Burnt copper-gold joint venture where recent drill results returned high copper concentrations. Falcon Gold has secured permits for 11 drill holes totaling 1,100 meters, with plans to expand to 2,000 to 3,000 meters. 

Underexplored regions hold promise

Asise from proven copper-rich zones, juniors are also exploring and developing mines in promising underexplored regions alike to meet the anticipated demand for the metal due to electrification. 

EuroPacific Metals (TSX-V:EUP) is advancing the Miguel Vacas copper deposit in Portugal, with recent drill results from the project revealing significant high-grade copper mineralization. A 350-meter drill hole intersected 10.5 meters grading 2.56%, with a high-grade interval of 5.9 meters at 4.52% copper.

In Jamaica, C3 Metals Inc (TSX-V:CCCM, OTC:CARCF) is advancing its 100%-owned Bellas Gate copper-gold project, with recent drill results from the Camel Hill prospect highlighting the project’s potential. These results, along with drill results from Geo Hill and combined with coincident geochemical and geophysical anomalies, suggest a large hydrothermal system.

Finally, over in Zambia, Midnight Sun Mining Corp (TSX-V:MMA, OTCQB:MDNGF) has raised $10 million to fund its exploration plans at the Solwezi copper oxide project. Previous work carried out at the project has identified multiple zones of high-grade oxide copper mineralization.   

With demand expected to outstrip supply in the near future and big miners on the hunt for new projects to fill their pipelines, meeting global electrification goals demands a considerable expansion in copper mining operations.