Europe, Copper demand under pressure due to Green Deal

The world’s largest economies are committed to reducing carbon emissions by diminishing their reliance on fossil fuels.

They are building solar panels and wind turbines to make renewables their primary source of energy, and we can add electric cars to the list. However, all these ambitions require significant volumes of copper, a metal whose electrical conductivity makes it indispensable in the production of green technologies.

But the new green revolution, which will gain momentum in the coming years, comes amid a shortage of copper production.

Copper demand was under pressure in 2022 amid political tensions, economic slowdowns in the US and Europe and anti-Covid measures taken by China.

The red metal is now trading at around $8,300/tonne, after the price fell more than 20% from its 2022 peak in March. However, demand is set to grow in the medium term, while supply cannot keep up.

Under these conditions, Goldman Sachs analysts expect the price of copper to reach $11,000/tonne by the end of 2023.

Green technologies strain demand

The global transition to clean energy is moving fast, and as demand for green technologies grows, more and more copper is needed.

Renewable energy plants require on average 8 to 12 times more copper than fossil fuel forms of energy generation, and electric vehicles consume 3-4 times more copper than an internal combustion engine vehicle.

Current prospects for copper supply in the coming years are well below demand, as copper mines usually take more than a decade to develop, and relatively low commodity prices have discouraged investment in recent years.

“Quite frankly, this shortfall will have a dramatic impact on our ability to make the infrastructure needed for the energy transition – such as wind turbines, EVs and charging stations,” says Kate Southwell, General Counsel at Pala Investments, an investment company focused on raw materials needed to decarbonise.

“Copper cannot be easily substituted in these uses so it is highly likely to see cost increases that will ultimately be borne by consumers and OEMs.”

Since the severe financial crisis that began in 2008, many mining companies have focused their investments on short-term projects to maximise profits. Because copper prices have been relatively low, and opening new mines requires billions of dollars of upfront investment, copper mining has not been a priority, except for a few boom years in the early 2010s.

Romania, in last place in Europe in the exploitation of own resources

Romania, despite being a country with significant copper ore reserves, the largest in Europe, only makes little use of this advantage.

Canada’s Frasier Institute, recognized for its assessments of mining business opportunities around the world, showed in 2021 that out of 112 countries, Romania ranked 109th. Moreover, in terms of the exploitation of its own resources, Romania ranked last in Europe.

Currently, Romania produces around 55,000 tonnes of copper ore annually from the Rosia Poieni mine, owned by the state-owned company Cupru Min, and Baita, controlled by the British company Vast Resources.

The largest quantity, over 50,000 tonnes, is provided by Cupru Min, which holds about 60% of Romania’s reserves.

Last spring, Economy Minister Florin Spataru brought back to public attention Romania’s intention to build a copper ore processing plant after the non-ferrous metallurgy was destroyed more than 15 years ago.

However, under current conditions, the construction of a processing plant is not economically justified, given that a minimum quantity of 120,000 tonnes needs to be processed annually for such a plant to be even close to being profitable.

Another option would be to repatriate the copper resulting from refining the concentrate, experts say, but this is not being considered by the authorities.

For years, what Cupru Min extracts goes to China, and in addition to the quantities of copper that Romania’s economy loses, the other metals that result from refining the ore can also be added to the list of losses: selenium and tellurium, two vital elements for rocket engines and sub-assemblies that require materials with high temperature resistance, gold, and silver.

For example, the Phoenix Copper Smelter in Baia Mare used to produce 40,000 tonnes of copper per year, 12 tonnes of gold and 120 tonnes of silver per year, but it was all destroyed. In addition, Ampelum Zlatna used to produce 15,000 tonnes of copper per year, but this plant has also disappeared.

50,000 tons of ore for sale

Cupru Min sent its copper ore production to China in 2021 and 2022 through Trafigura Group Pte. Ltd. of Singapore, one of the world’s largest players in metals and energy trading.

For contracting the 2023 production, Cupru Min organised a new international tender in November 2022, and the opening of bids took place in mid-December last year.

The winner of the 50,000 tonnes of copper ore has not yet been announced.

Still waiting for mining to reopen

Moldomin, owner of about 30% of Romania’s copper concentrate reserves (approx. 200 million tonnes), was sold in 2021 to Turkey’s largest mining company, Eti Bakir.

But reopening mining here also raises a legislative issue. A new mining law was enacted in 2020, but although some time has passed since then, the National Agency for Mineral Resources (NAMR) has not adopted the methodological rules for its implementation. Among other things, they should also regulate the procedure for reopening closed mining operations.

Estimated shortfall of 50 million tonnes

While Romania has significant deposits but is not exploiting them to their true potential, Glencore, one of the world’s largest dealers of non-ferrous concentrates, is now looking at developing the huge El Pachon mine in Argentina.

Glencore CEO Gary Nagle forecasts a ‘huge shortfall’ of copper, which could reach a cumulative 50 million tonnes between 2022 and 2030. Even now, despite concerns about a global recession, the balance between supply and demand remains tight. Quantities of copper sold on international exchanges reach record low levels, covering only a few days of global consumption.

Large mines reduce production

According to the International Copper Study Group (ICSG), only two major copper mines have been opened between 2017 and 2021.

Currently, two greenfield projects, Kamoa Kakula in the Democratic Republic of Congo and the Quellaveco mine in Peru, are increasing production, but this growth is offset by operational problems faced by other major mines around the world.

In Chile, the world’s largest copper producer, production will fall by 5.8% in 2022, according to government estimates. Chile’s state-owned Codelco said production fell in the first nine months of 2022 and will fall further in 2023.

In December, Panama’s government ordered Canada’s First Quantum Minerals to halt operations at its Cobre Panama copper mine after it failed to agree on royalties under a new contract. Local community protests in Peru are also disrupting copper production and supplies.

Russia opens up a huge deposit

In Russia, the giant Udokan Сopper project is scheduled to start production this year, with an estimated annual extraction of 135,000 tonnes of copper ore.

With ore reserves of over 26 million tonnes, Udokan is one of the largest deposits globally. Located in Russia’s Far East, near the border with China, the deposit is ideally positioned to transport the metal to a country that accounts for more than half of the world’s copper consumption.

China, the big beneficiary of the Udokan deposit

While Europe is postponing some of its green energy projects due to economic problems caused by higher oil and gas prices, China is on track to achieve net zero emissions by 2060.

This country is already the world’s largest producer of electric vehicles, solar panels, and electric batteries. The country’s development plans include increasing renewable energy capacity and increasing the share of electric vehicles in total car sales.

These initiatives will require additional copper and the Udokan deposit is ready to meet China’s growing demand, Energy Industry Review writes.

Greece, Fluor will be responsible for infrastructure, non-process facilities, process area and tailings filtration at the Skouries mine

Fluor Corporation has received a contract to provide engineering, procurement and construction management services (EPCM) for the Skouries gold-copper mining project in Greece.

The contract has been awarded by Hellas Gold Single Member, a wholly-owned unit of Eldorado Gold.

Under the contract, Fluor will be responsible for infrastructure, non-process facilities, process area and tailings filtration.

Located within the Halkidiki Peninsula of Greece, the Skouries high-grade gold-copper porphyry deposit is expected to have an average annual production capacity of 140,000oz of gold and 67 million pounds of copper over its initial mine life of 20 years.

Fluor Mining & Metals business president Tony Morgan said: “The execution of this project will build on Fluor’s technical expertise in large-scale gold and copper projects.

“Fluor is excited to be a part of this important project that will drive economic development in the region and provide the essential raw materials to support the transition to a more sustainable future.”

Fluor’s Vancouver office will be the project’s lead office. The work will be supported by the firm’s New Delhi and Calgary offices.

Led by Fluor’s Greece office, the onshore construction management and detailed engineering work will be carried out by a consortium of Greek engineering service companies.

This project is expected to create up to 800 construction jobs and 1,400 long-term jobs once operational.

Construction on the mine is planned to start this year, with first production anticipated in the second half of 2025.

The Skouries project forms part of the overall Kassandra Mines Complex, which also includes the Olympias Mine, the Stratoni Port Facility and the Kokkinolakkas Tailings Management Facility, Mining Technologies reports.

Greece, The utilization of the gold and copper deposits at the Skouries mine can now proceed

Hellas Gold on Thursday announced that the utilization of the gold and copper deposits at the Skouries mine in Halkidiki can now proceed, as the board of parent company Eldorado Gold has approved the decision to invest 680 million euros.

The total life of the mine will be some 20 years, with an average annual production of 140,000 ounces of gold and 67 million pounds of copper. Production, the firm said, is expected to begin in the second half of 2025.

The resumption of the project at Skouries and its entry into the production phase is part of the company’s new investment plan that has been agreed, amounting to €3.1 billion, Ekathimerini reports.

North Macedonia, Central Asia Metals increases copper production

Central Asia Metals today announced a Q3 2022 operations update for the Kounrad dump leach, solvent extraction and electro-winning copper recovery plant in Kazakhstan and the Sasa zinc-lead mine in North Macedonia.

The company said that Kounrad’s Q3 2022 copper production of 4,067 tonnes brings output for the first nine months of 2022 to 10,685 tonnes (9M 2021: 10,360 tonnes). Copper sales during Q3 2022 were 4,093 tonnes, bringing the total for the first nine months of the year to 10,499 tonnes.

CAML added that Sasa’s Q3 2022 payable production of zinc was 4,837 tonnes and of lead was 6,554 tonnes, bringing total payable production for the nine-month period to 13,625 tonnes of zinc and 19,690 tonnes of lead.

Importantly, the company noted it is on course to achieve increased 2022 guidance for Kounrad’s copper production (13,500 to 14,000 tonnes) and on track to meet Sasa’s 2022 production guidance (zinc in concentrate, 20,000-22,000 tonnes; lead in concentrate, 27,000-29,000 tonnes).

CEO Nigel Robinson commented, “I am pleased to report safe and strong production from both of our operations during Q3 2022, with zero LTIs. At Kounrad, we announced increased 2022 production guidance with our H1 2022 results, and we are on track to deliver this and meet our production targets at Sasa.”

Central Asia Metals, an AIM-listed UK company based in London, owns 100% of the Kounrad SX-EW copper project in central Kazakhstan and 100% of the Sasa zinc-lead mine in North Macedonia, Kitco reports.

Kazakhstan, KAZ Minerals increases copper production 26% in first nine 2022

KAZ Minerals, the largest copper producer in Kazakhstan, reported today that its copper production increased by 26% to 282 kt in the first nine months of 2022 (9M 2021: 224 kt).

“The world class ramp up of the second sulphide concentrator at Aktogay, as well as improved performance at Sulphide 1 and the oxide plant, enabled Aktogay to increase its copper output by 64% to 168 kt in the year to 30 September 2022 (9M 2021: 102 kt),” the company said in a statement.

The company’s 9M 2022 gold production of 129 koz increased by 2% compared with 9M 2021 (126 koz) due to higher output at Bozshakol where throughput and grades processed improved in the period.

In 9M 2022, KAZ Minerals also produced 2,718 koz of silver (9M 2021: 2,513 koz) and 29.4 ktonnes of zinc (9M 2021: 34.1 ktonnes).

KAZ Minerals added that its copper sales were aligned with copper production in the first nine months of the year but were 9% behind production in the third quarter, as Aktogay output exceeded expectations.

Importantly, the company noted that its finished goods inventory is expected to reduce in the fourth quarter and fully unwind during 2023.

CEO Andrew Southam stated, “KAZ Minerals has delivered an excellent set of operational results in the first nine months of 2022, with copper output increasing by 26%. The world class ramp up of the second sulphide concentrator at Aktogay has resulted in a step change in our production, while site management has continued to improve ore throughput across the Group to maximise copper output.”

KAZ Minerals is the largest copper producer in Kazakhstan. It operates the Aktogay and Bozshakol open pit copper mines in the Abay and Pavlodar regions of Kazakhstan, three underground mines and associated concentrators in the East Region of Kazakhstan and the Bozymchak copper-gold mine in Kyrgyzstan. The company also completed a Bankable Feasibility Study for the greenfield Baimskaya copper project in Russia, which it acquired in 2018, Kitco reports.

Anglo Asian Mining PLC has reported higher copper and silver production in the third quarter

The Azerbaijan-focused company remains on track to bring the new Zafar mine into production in 2023

Anglo Asian Mining PLC has reported higher copper and silver production in the third quarter and maintained its overall annual production guidance of 54,000 to 58,000 gold equivalent ounces (GEOs).

The AIM-listed gold, copper and silver producer also said the Zafar mine design has advanced well and that it remains on track to bring the new mine into production in 2023. Geotechnical drilling has been completed and the drill core is in the process of being tested, it said.

Anglo Asian produced 14,309 GEOs in the third quarter, compared with 16,316 GEOs in the year-earlier period, as lower gold production outweighed the increase in copper and silver output.

The Azerbaijan-focused company saw an improvement in its gold bullion sales compared with the year-earlier quarter. It sold 10,000 ounces of gold bullion at an average US$1,727 per ounce versus 6,828 ounces sold at an average US$1,815 an ounce in the third quarter of 2021.

Anglo Asian had cash of US$15.3mln as of 30 September 2022.

During the quarter, the company’s revised production-sharing agreement became law in Azerbaijan, granting the group three new contract areas, Pro Active Investors.