HIGHLIGHTS EVs, wind turbines serve as growing areas of demand
Copper prices to remain supported above $4/lb
Greater emphasis and investment in electrification and renewable energy initiatives are set to steadily boost copper demand through at least the end of the decade, according to American Pacific Mining executives.
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Register Now "This green revolution is really going to be dependent in many ways upon copper," CEO Warwick Smith said in an interview with S&P Global Platts.
Electric vehicle production, for example, will serve as a notable opportunity for copper demand, especially as government support increases to promote EV adoption.
Seven million EVs are projected to be on US roads by 2025, up from 567,000 units currently, Smith said.
"Your average car takes about 18-49 lb of copper but hybrids take 85 lb of copper, plug-in electric vehicles take 130 lb and battery electric vehicles up to 183 lb," he said, adding that EV charging stations also require copper components. "There is a significant amount of copper needed to go from just over half a million electric cars to 7 million."
Copper-intensive solar and wind energy infrastructure also represents a burgeoning area of demand for the metal, Smith added.
The Biden administration said in January it would sell leases this year for offshore wind projects to be built off the coasts of New York and New Jersey, which could generate up to 7 GW to power 2 million homes. The project will emphasize the use of union labor and domestic materials, it added.
The lease sale supports a larger US initiative to responsibly deploy 30 GW of wind power by 2030, according to a White House statement.
"One wind turbine uses 4 mt of copper," Smith said, adding that 30 GW of offshore wind energy equates to about 3,000 wind turbines. "That is about 12,000 mt of copper."
American Pacific is currently developing its Madison copper-gold mine project in Montana through a joint venture with Rio Tinto.
New dynamics support copper pricing
Shifting dynamics in global manufacturing and copper production methods, in addition to strong demand, are expected to keep copper prices stable over $4/lb for the long-term, American Pacific President Eric Saderholm said.
Cost-effective solvent extraction and electrowinning processes that have traditionally been used to produce copper are becoming less feasible as mines get deeper, thus necessitating the implementation of other methods, Saderholm said.
"Now you're getting deep enough in these mines that the ores don't respond to that (SX-EW) anymore, and you are getting into flotations, so smelter space is going to affect the price of copper," he said.
Saderholm said China consumes more than half of the copper produced globally because the country manufactures a large portion of consumer goods, but copper pricing could be impacted if companies begin to move some manufacturing operations to other regions.
"I think there will be a shift back to the US and North American production of things within the next 10 years," he said. "It's going to be a little more expensive to produce things domestically than it will be to import them, and that's going to keep the price of copper up."
Copper demand has now reached 25 million mt, from 17 million mt in 2010, and the bullish trend is projected to continue, Saderholm said.
"I don't see that anything's really going to change," he said. "I just see the dynamics of how you produce copper and where you use it is going to change."
Saderholm estimated that copper pricing would remain stable between $4.00/lb and $4.75/lb for the foreseeable future, with production costs staying at about $2.50/lb.
The Platts copper cathode transaction delivered Midwest averaged at $4.52/lb in January, rising from $3.70/lb in January 2021. The transaction assessment adds the spot COMEX copper price with the Platts copper cathode premium.
Location, partnership offer advantages
Smith said the prospects for copper production at Madison benefit from the mine's location and American Pacific's partnership with Rio Tinto.
"Madison is a past producing mine in a really friendly part of Montana for production," he said. "Also, having Rio Tinto as partners is big. Rio, like any of the big mining companies, does a tremendous amount of due diligence before they get involved because they want to know that they can find it and that they can put it into production."
Madison is under an earn-in, joint venture agreement whereby Rio Tinto subsidiary Kennecott Exploration can spend $30 million over 11 years to earn up to 70% of the project.
In January, American Pacific announced the results of the most recent drilling campaign at Madison. Highlights included results of 14.44 g/t gold and 0.11% copper drilled over 6.53 m, 39.57 g/t gold and 0.28% copper over 2.35 m, and 146 g/t gold and 0.98% copper over 0.48 m.