ARU ASX: This BHP old boy thinks copper and rare earths prices will spike (copyright link)

This BHP old boy thinks copper and rare earths prices will spike

Former BHP copper boss Darryl Cuzzubbo says the mining giant is thinking in decades

when it makes big moves such as its $60 billion takeover tilt at Anglo American.

Mr Cuzzubbo, who ran the Olympic Dam copper, gold and uranium mine for part of a 24-year career with BHP, is now chief executive of Arafura Rare Earths, and sees parallels between copper and rare earths.

Arafura Rare Earths boss Darryl Cuzzubbo on the balcony of his Perth office last week. Trevor Collens

“There are similarities … in the sense that the energy transition cannot occur without a lot more copper,” he said.

Mr Cuzzubbo is banking on a big increase in demand for rare earths as Arafura pushes ahead with the $1.62 billion Nolans project in the Northern Territory after receiving an $809 million package of loans from the federal government.

The mining veteran – who spent a tumultuous year running BHP-backed SolGold and its big Ecuadorian copper project before joining Arafura – sees the logic in going after Anglo American’s copper prize.

“When BHP move, they think in decades. That’s why over the long term they always come out on top,” he says.

“The problem in copper is two-fold. Mines are getting deeper and lower-grade, so it’s more costly to extract copper. And if you look at the development pipeline for large tier 1 copper projects, it’s pretty bare.

“So, you’ve got to be bullish on the copper price. It has already been firming despite the global economic outlook still having a fair bit of uncertainty, which normally weighs on the copper price.”

In rare earths, Arafura predicts a supply shortfall, with global production sitting about 65,000 tonnes a year and demand on track to hit 126,000 tonnes a year by 2032 based on forecast use in electric vehicles, wind turbines, defence applications and electronics.

That is despite a slump that has hit the world’s biggest non-China producers – Lynas Rare Earths and MP Materials – hard.

Lynas boss Amanda Lacaze said Lynas and China’s Northern Rare Earths were the only producers in the world making money with neodymium and praseodymium (NdPr) prices at $US47 per kilogram.