The demand for copper is rising beyond predicted levels because of its extensive use in renewable energy technologies, electric vehicles, and infrastructure development. According to GlobalData, there are currently more than 709 copper mines in operation worldwide, spanning over 150 countries. In 2023, the ten largest copper mines by production were located in Chile, Peru, Mexico, the Democratic Republic of the Congo, Indonesia, the United States, and Panama.
However, even with those mines, mining companies are struggling to keep up, and need a source of new projects. New exploration projects provide potential for an acquisition to instantly increase their production numbers. For example, Solaris Resources (TSX:SLS) (NYSE:SLSR) and its flagship Warintza project in Ecuador is regarded as one of the best greenfield copper development opportunities. The project already boasts a large 1.5 billion tonne open pit resource, primarily from the Central deposit, one of six discoveries made on the project to date and an updated mineral resource expected in early July taking in an additional two years of drilling. Analysts are expecting the updated resource to be in the range of 2 – 3 billion tonnes when this update is issued. This is one of the last major greenfield districts at low elevation and adjacent to infrastructure supplying renewable hydroelectric grid power in the global copper industry.
As Solaris Resources continues to advance the project with the filing of its Environmental Impact Assessment (EIA) in Q3 2024, Pre-Feasibility Study (PFS) in H2 2025 and an expected fully-permitted, construction ready mine by early 2026, the true value of this world-class asset lies in its potential for major mining companies to develop and add to their numbers.
The Largest Producing Mines in the World
Currently, there are several large copper mines around the world. The Escondida Mine in Antofagasta, Chile, owned by BHP Group, takes the lead with an estimated production of 882.1 thousand tonnes of copper in 2023. The Collahuasi Mine in Tarapaca, Chile, owned by Glencore Plc, follows closely with an estimated production of 563.39 thousand tonnes. The Cerro Verde Mine in Arequipa, Peru, owned by Freeport-McMoRan, ranks third with an estimated production of 444.01 thousand tonnes.
Other major mines include the Buenavista del Cobre Mine in Sonora, Mexico (427.55 thousand tonnes), the Kamoa-Kakula Project in Katanga, Democratic Republic of the Congo (423 thousand tonnes), and the Grasberg Block Cave Mine in Papua, Indonesia (418.53 thousand tonnes). The Antamina Mine in Ancash, Peru, the Morenci Mine in Arizona, United States, the El Teniente Mine in Cachapoal, Chile, and the Cobre Panama Project in Colon, Panama, also contribute significantly to global copper production.
Challenges and the Looming Supply Deficit
Despite the impressive production figures, the copper mining industry faces numerous challenges. Environmental opposition, local community resistance, and regulatory hurdles have delayed the development of several large-scale projects, such as the Pebble project in Alaska and the Resolution copper project in Arizona.
The growing demand for copper, driven by the global shift towards sustainable energy and electrification, is expected to outpace supply in the coming years. Wood Mackenzie estimates that an additional 9.7 million tonnes of new copper supply will be needed over the next decade from projects that have yet to be put into development. This “unattainable gap” between green energy demand and copper supply poses a significant challenge for the industry and the world at large.
The International Energy Agency (IEA) predicts that the demand for copper will double by 2040, driven by the increasing adoption of renewable energy technologies and electric vehicles. The IEA estimates that the renewable energy sector alone will require 3 million tonnes of copper per year by 2040, up from 1 million tonnes in 2020. Additionally, the growing demand for electric vehicles is expected to increase copper consumption by 2.5 million tonnes per year by 2040.
However, the current copper project pipeline is still insufficient to meet this surging demand, even with the biggest producing projects. S&P Global Market Intelligence reports that the number of new copper discoveries has been declining over the past decade, with only 224.3 million tonnes of copper discovered between 2010 and 2019, compared to 962.4 million tonnes between 1990 and 2009.
On top of all of this, the average grade of copper in new discoveries has been declining, making it more challenging and expensive to extract the metal. The average copper grade in new discoveries fell from 0.80% in the 1990s to 0.51% in the 2010s, according to S&P Global Market Intelligence.
The Importance of New Projects
To address the impending supply deficit, the development of new copper projects is one of the ways the industry might balance the supply. The top 10 largest undeveloped copper projects, as compiled by Mining Intelligence, hold the key to bridging the gap between demand and supply.
The Pebble project in Alaska, despite its controversies, remains the largest undeveloped copper project with 37.18 million tonnes of contained copper. The Resolution copper project in Arizona follows with 27.27 million tonnes, while the Kerr-Sulphurets Mitchell (KSM) project in British Columbia, Canada, holds nearly 25 million tonnes.
Other notable undeveloped projects include the Reko Diq deposit in Pakistan (50% owned by Barrick Gold), The Warintza Project in Ecuador (owned by Solaris Resources), La Granja in Peru (owned by Rio Tinto), El Arco in Mexico (Southern Copper), Hu’u Onto in Indonesia (Vale and ANTAM joint venture), Nueva Union in Chile (Teck and Newmont joint venture), El Pachon in Argentina (Glencore), and Tampakan in the Philippines (Sagittarius Mines).
The global copper mining industry supplies the world with this metal we use in so many important applications, but it is struggling to keep up. While current production levels are impressive, the industry faces challenges in meeting the growing demand driven by the green energy transition. The development of new copper projects will be needed, and rapidly, to close the supply deficit and ensure a sustainable future.
Related
