Copper Value Chain

Over the last week, I have been reviewing all the old Havilah ASX Media Releases and reading up on Kalkaroo's native copper. Based on past releases, the native copper pellets (and copper sulphide concentrate) from Kalkaroo would be sold to overseas smelters. Transport costs for concentrate vary: $50-$100 tonne. That does not include refinery charges.

So it got me thinking, with copper back above US$3/lb and with all the copper mineral resources in the state, why hasn't someone built a new 'state of the art' copper smelter and refinery in South Australia.

Value is predominantly generated upstream:

90% at Mine
   7 % at Smelter
   3% at Refinery

And the obvious question: who would pay for it?

The Commonwealth government is looking for new infrastructure projects to throw money at. As I understand it, there are no mega additional projects from the Commonwealth on the horizon arising from the Budget this week.



If I was making the decision, I would build this new 'state of the art' copper smelter and refinery at a nexus of appropriate road, renewable energy, rail and port infrastructure. Somewhere like the Port Augusta Operations site at Port Playford, South Australia.

A 'common use' state of the art facility in regional South Australia could transform the sector in and the capacity of the South Australian based mining companies (current copper concentrate producers: OZ Minerals; future copper concentrate producers Havilah and Rex Minerals Limited) to predict and control their operations. As it would be 'common use', it could be shared among other Australian copper companies.

First, instead of exporting copper concentrate these South Australian-based miners would be producing and exporting copper metal, which adds at least 10% of value (think jobs, GDP).

Second, they would avoid being at the mercy of the vagaries of overseas markets and fluctuating conditions such as sudden changes in trading alliances, tariffs or policies relating to what a jurisdiction will or will not allow to arrive on its shores. In short, they will gain more control and reduce the unpredictability in the process.

Thirdly, with supply chain security for strategic and critical minerals like cobalt (and REE and copper) at the forefront due to the COVID-19 pandemic, a new 'state of the art' copper smelter and refinery for national economic and security interests would be perfect right about now.

In addition, the increasing trend toward electric vehicles ('EV') has added to the impetus to ensure that a reliable and ethical supply of refined copper is available for use in EVs.

In broader terms, the establishment of a 'common use' smelter and refinery facility in South Australia would demonstrate to the world that in Australia mining companies are ready and able to think innovatively and act accordingly.





Just a thought.

Cheers

These are only my thoughts and it does not constitute investment advice. Before acting on any information you read and before making any financial or investment decisions, you should always consult your advisor(s) or other relevant professional experts.