Japan to Raise Cap Stake on Copper Mines to 50% TOKYO -- The Japanese government will increase the limit on the stake it is allowed to hold in copper mines, Nikkei has learned, in a bid to encourage investment in global copper projects by the private sector and ensure stable supplies of the key resource.
Japan's interests in copper mines are mainly in South America and Australia. With copper a key resource for building infrastructure, such as transmission wires, new investments are expected in projects in such places as Africa that carry higher risks.
Under current rules, the state-run Japan Organization for Metals and Energy Security, or JOGMEC, can cover up to 50% of a public-private investment in a copper project. The Ministry of Economy, Trade and Industry, which oversees JOGMEC, will raise that limit to around 75% as soon as this fiscal year.
The move seeks to mitigate the country risk faced by private-sector companies. A stake between 20% and 30% in a copper mine would still require an investment costing billions of dollars. Through the new framework, Japan will be better positioned to compete for copper interests.
Nations worldwide are racing to secure copper interests to support industrial decarbonization efforts. Last year, the U.S. government added copper to a list of critical minerals eligible for supply-chain assistance.
This year, the European Union implemented the Critical Raw Materials Act, geared toward stabilizing the supply chain for the materials. Copper is among the resources covered under the law.
Japanese companies have seldom invested in projects in Africa, due to the significant country risk in the region. Meanwhile, China and Middle Eastern countries have moved to secure natural resource interests in African nations.
In response, the industry ministry will present measures to stabilize future supplies at a meeting of experts beginning Thursday. JOGMEC's rule change will be part of those moves.
JOGMEC has provided 75% financial backing for public-private investment in a rare metal project. Based on that track record, the industry ministry will work with the Ministry of Finance and other agencies to finalize provisions for the higher investment limit for copper, and to obtain government funding for the initiative.
In addition, the industry ministry will expand support for companies engaged in high-risk exploration of a wide variety of minerals, including copper and rare metals.
Under a new mechanism, JOGMEC will make initial investments in multiple projects in which Japanese businesses are planning to invest. These interests will later be transferred to those companies, which would take on certain cost burdens at that point.
Japan's demand for copper will grow to roughly 1.35 million tonnes in 2040, according to JOGMEC, which would be about a 30% jump from 2022. Copper supplies from projects owned by Japanese interests are on track to decline, due in part to exhausted reserves.
Global demand for copper is expected to exceed supplies from the 2030s, according to an analysis by S&P.
Japan's strategic energy plan has set a goal of attaining 80% self-sufficiency in copper and other base metals supplied by Japanese-owned interests, up from the current ratio of less than 50%. The share is expected to shrink to around 40% in the late 2030s.