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Special Report | Copper: Positioned at the Heart of the Metal Supercycle

12 February 2024 18:23
Copper Positioned At The Heart Of The Metal Supercycle 1

Copper, a metal renowned for its exceptional properties, plays a pivotal role in both traditional industrial sectors and emerging sustainable technologies.

Its versatility, from being highly malleable and ductile to possessing antimicrobial qualities and exceptional conductivity, positions it as a cornerstone element in various applications. Beyond its intrinsic value, the demand for copper serves as a barometer for assessing the pulse of the global economy.

As major economies worldwide channel substantial investments into green technology and energy transition initiatives, such as the US Inflation Reduction Act allocating a staggering $738 billion, the demand for copper is on the brink of a significant upswing. This surge in demand is expected to catalyse the growth of the global green economy, with projections suggesting nearly double-digit growth rates by 2030.

Moreover, the inclusion of copper in the critical minerals list of the United States further underscores its indispensable role in propelling the transition towards a more sustainable future.

Despite the promising prospects, the primary copper supply chain faces daunting challenges in meeting the impending surge in demand. Years of underinvestment by producers have led to a scarcity of mines, near-term producers, and high-grade ore bodies. Goldman Sachs projects a supply gap of nearly 10 million metric tonnes by 2035, potentially acting as a bottleneck to global economic growth and hindering progress in the energy transition.

The past half-century has witnessed a remarkable threefold increase in refined copper consumption, primarily fueled by the expansion of the global economy, with China emerging as a significant contributor to this trend. Copper’s applications span across diverse sectors, including construction, electrical and electronics, machinery and equipment, and consumer products, positioning these industries as primary drivers of copper demand.

Screenshot 2024 02 12 At 6.15.37 Pm

While projections indicate a steady rise in demand from conventional sectors, the most significant surge in copper demand is anticipated to stem from the global shift towards clean energy.

Governmental initiatives, once seen as mere public relations gestures, have now evolved into active investment endeavours, with substantial funds and tax incentives being allocated in key nations like the US, China, Canada, and the EU. Notably, countries such as the UK, France, Sweden, Hungary, and Denmark have even codified carbon targets into their legislation.

This transition towards clean energy not only signifies a monumental shift in energy production but also holds the potential to reshape the dynamics of the copper market. As renewable energy sources become increasingly integrated into the global energy mix, the demand for copper in infrastructure, transmission lines, and renewable energy technologies is poised to soar, underscoring the critical role of copper in powering the green revolution and shaping the future of global economics.

 

“… if you really think about the future, you can see the world is clearly changing. It’s going to be electrified, and it’s going to need a lot of copper.”
John LaForge, Head of Real
Asset Strategy, Wells Fargo

 

Unlocking Australia’s Copper Potential

Australia has embarked on a strategic initiative aimed at fortifying copper and nickel projects, recognising their indispensable role in the ongoing global energy transition. Impressively, this initiative has been seamlessly implemented without any disruptions in the supply chain, underscoring the nation’s proactive approach to sustainable resource development.

These critical materials are now primed to access a substantial pool of approximately $40 billion in government assistance from a diverse array of agencies. This support network includes Export Finance Australia, The Northern Australia Infrastructure Facility, The Clean Energy Finance Corporation, The Value Adding in Resources Stream, and the National Reconstruction Fund, signaling a concerted effort to propel the growth of these vital sectors.

The recently established strategic materials list, separate from the nation’s critical minerals register, encompasses copper, nickel, aluminium, phosphorous, tin, and zinc. These materials boast robust industries, global market presence, transparent pricing mechanisms, and resilient supply chains, positioning them as key drivers of economic growth and sustainability.

South Australia, in particular, has recognised the critical importance of copper, both within the state and on a broader national and global scale, especially amidst the imperative transition towards decarbonisation. Taking cues from leading jurisdictions such as the European Union, Japan, India, China, Canada, and the USA, South Australia has integrated copper into its own Critical Minerals Strategy, highlighting its strategic significance in the global resource landscape.

In a proactive move to enhance the prominence of copper within the state, the South Australian Government has allocated substantial resources, earmarking over $2 million for the establishment of a dedicated Copper Taskforce. This collaborative effort aims to work closely with local copper producers and explorers to devise a comprehensive, long-term strategy focused on bolstering South Australia’s position as a leading player in the global copper industry.

Moreover, South Australia is steadfast in advocating for the inclusion of copper in the national Critical Minerals list, emphasising its importance at a national level and advocating for measures to support its sustainable extraction and utilisation.

Amid a surge in global funding and heightened recognition of its critical role, the copper sector presents a promising outlook for investors worldwide, with Australia poised to play a significant role in driving innovation and sustainability in this vital industry.

The coming lithium, copper bull market will be ‘frightening.’”
Bill Beament, Australian Mining Engineer/Entrepreneur

Copper Companies to Watch

Capella Metals (Proposed ASX Code:CAP)

Capella Metals emerges as a newcomer in the exploration sector, focusing on copper and uranium within the esteemed Mount Isa region.

With a sprawling tenure of over 2,000 square kilometres in this highly prospective area, Capella shares regional structures with industry giants like Glencore‘s Mount Isa Operations and Paladin‘s Valhalla Uranium Project, highlighting its strategic positioning amidst globally significant deposits.

The Company’s strategy focuses on tapping into known high-grade copper-gold deposits, multiple high-grade uranium prospects, and large copper and zinc-silver-lead deposits. Notable historical mines and prospects like Surprise Mine, boasting 23.8m @ 4.67% Cu, and Queens Gift, with rock chips containing up to 2.86% U3O8, further underscore the potential of these targets.

The Company’s strategy revolves around targeting known high-grade copper-gold deposits, multiple high-grade uranium prospects, and giant copper and zinc-silver-lead deposits. Notable historical mines and prospects including Surprise Mine, boasting 23.8m @ 4.67% Cu, and Queens Gift, with rock chips containing up to 2.86% U3O8, further underscore the potential of these targets.

Additionally, Capella taps into the potential of major structures that have only been superficially explored, offering the possibility of significant discoveries akin to a “Mt Isa 2.0” scenario.

Anticipated to list on the ASX in early April, Capella Metals looks poised to be in the right place at the right time for copper and uranium exploration success.

Capella Metals IPO Presentation can be found online here.

Castillo Copper (ASX:CCZ)(LSE:CCZ)

Castillo Copper Limited is a base metal explorer focused on copper projects in Australia and Zambia.

Recently, the Company classified its NWQ Copper Project in Mount Isa’s copper-belt as a core asset, signalling its strategic importance.

Situated in one of the most prolific regions for high-grade copper, zinc, lead, and silver deposits globally, the Project boasts proximity to numerous historically significant and presently operational copper mines like Lady Annie, Mt Oxide, and Capricorn Copper.

Leveraging an extensive historical exploration database, Castillo Copper has identified 22 promising targets, notably including the significant ‘Big One’ copper discovery. The Big One deposit holds a JORC Mineral Resource Estimate (MRE) of 2.1 million tonnes at a grade of 1.1% copper, equating to approximately 22,000 tonnes of contained copper.

Alongside its NWQ Copper Project, the Company holds high-quality assets in Zambia’s copper-belt, near Broken Hill’s deposit, and the Cangai Copper Mine in NSW.

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