Copper Demand Supply - discussion.

In today's Australian newspaper an article from The Economist was published in relation to changes in the energy metals economies. Here is the headline:
The transition to clean energy will mint new commodity superpowers

There were some interesting observations on copper and here are a few excerpts.
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In mid-February Russia seemed on the verge of a revolution with a distinctly reddish tint. Alisher Usmanov, an oligarch, was developing Udokan, a copper mine in Siberia that required removing an entire mountain top.
In the Arctic tundra Kaz Minerals, a mining firm, had raised enough cash to build Baimskaya, a rival mine so remote that it needed its own port, icebreaker and floating nuclear plant.

For years the projects had been put on hold because of their immense costs. But expectations of soaring demand for copper, used in everything from grids to turbines, had boosted prices of the auburn metal, making the mines viable.

Now the copper price is even higher. But the projects are in trouble. Insiders say they are short of vital foreign equipment that has been blocked by the West after Russia’s invasion of Ukraine, and that they are starved of the funds they had expected from black-listed Russian banks.

Mr Usmanov, too, faces sanctions. A spokesman for Udokan says, “We are doing everything we can to ensure business continuity.” Yet even if the mine starts producing this year as planned, it is unclear who will buy its output. Foreigners, even the Chinese, are shunning Russian production.

As the world weans itself off dirty fuels, it must switch to cleaner energy sources. The International Energy Agency, an official forecaster, predicts that wind and solar could account for 70 per cent of power generation by 2050, up from 9 per cent in 2020, if the world embarks on a course to become carbon-neutral by 2050.

That translates into huge demand for the metals, such as cobalt, copper and nickel, that are vital for the technologies underpinning everything from electric cars to renewables; the IEA reckons that the market size of such green metals would increase almost seven-fold by 2030. And much like fossil-fuel reserves, these commodities are distributed unevenly. Some countries have none at all. Others are blessed with vast deposits.

The metals rush will not be as big as the oil-and-gas boom that toppled King Coal after the second world war. But there are some echoes with the past.

A second problem is the worsening quality of mineral deposits. Udokan says it is the last potential mine with copper content above 1 per cent of the rock. The average grade of Chilean copper has fallen by 30 per cent over the past 15 years, to 0.7 per cent. Lower grades are pushing up extraction and processing costs (and carbon emissions). “Today we use 16 times more energy to make the same pound of copper as we did 100 years ago,” says Mr Cutifani CEO Anglo American.

What surprised me was the low grades being discussed and to think that AIS has some much higher grades coming into production soon. This all points to improving profitability in the near term.

Happy to discuss.

Cheers.....D