Very interesting. Thanks John. Good to see a guy like Rick Rule giving such a big wrap.
What I found most interesting was Marin’s comments around just how important it is/is going to be to have “clean” concentrate . With dirty con getting discounts of 10-20% off the spot LME just because of the work the smelter needs to go to either blend or remove those impurities.
These big porphyry/epithermal deposits in Chile and Peru that provide the bulk of the smelter feedstock are getting older and “dirtier”. Higher levels of antimony, bismuth, lead and arsenic which incur quiet not insignificant costs/penalties will mean these projects “cost of production” become much higher - that is their true cost of production of pure copper as opposed to a copper concentrate (which is what gets reported in the all in sustaining cost line and the discount hits revenue).
The chart that keeps getting thrown around is that average head grades of copper over the past decade have declined from around 1% to 0.5% Cu (approximate). But in the same time the average head grade of arsenic has increased from 0.15% to 0.24%. Most smelters penalise feedstock over 0.2% and this is concentrate not headgrade so unless there’s a removal process built into the concentrator that head grade is only growing into % of concentrate (if Cu goes from 1% head grade to 30% concentrate then an equivalent elevation would result in arsenic levels over 5%).
I see some of codelcos mines such as Ministro Hales getting concentrate grades of arsenic of over 4% requiring either further work or blending before the smelter will even take it.
Looks to me that the Kalahari has some cleaner ore with far lower levels of these nasties.
MOD Price at posting:
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