The annual World Copper Conference is currently underway bringing analysts, producers, and investors to Santiago, Chile to discuss the future outlook of copper. Luke Viljoen, a project manager with several years experience in the mining industry, is in Chile reporting for MiningIR. These are the major themes he picked up from day one of the conference:
Attractiveness of Exploration and Mining in Chile
Speakers expressed mixed feelings relating to the attractiveness of new exploration and mining projects in Chile. CEO & Director of Coro Mining, Luis Albano Tondo, stated “Chile, for copper, is the best jurisdiction in the world for exploring, with a regulation that is very well understood, although has to be followed thoroughly.”
While Chile is the lowest risk country in South America for exploration it may be losing its competitive edge globally and in Latin America. Most complaints related to the difficulty for new entrants to gain mining and exploration licenses which are owned by only a few major companies. This requires new entrants to form complicated JV partnerships with existing major miners. The lack of a central geological database is another major downside. Marcelo Olivares, a board member of CESCO (Copper Mining and Study Center) discussed how in reality the existing ownership system must be accepted for now, as it is unlikely to change in the near future.
Anthony Amberg, President and CEO of Los Andes Copper acknowledged that while there are areas for improvement in Chile, the country still has great potential and exploration has not matured.
Copper Outlook – demand outpacing supply
The industry is at a critical point with not enough projects coming online to meet projected copper demand. The CRU Group, a business intelligence company, forecasts a significant supply gap over the next decade with a deficit of as much of 10mt/y by 2035. The copper market is expected to go into deficit from 2021. Hamish Sampson, a senior analyst from CRU stated that at least 75% of currently uncommitted projects in the pipeline will need to go into production to fill the gap by 2035.
There is a positive long-term narrative for copper fueled by economic growth, the rise of electric vehicles and renewables, and a lack of projected new mines. Industrialization and infrastructure is still expected to be the primary contributor for demand however, with EVs and renewables playing a secondary role. Much of expected economic growth will not come from China but from other developing regions as China´s economy slows.
A financial crisis, economic downturn, and an uncertain Chinese scrap metal policy (which may result in secondary metal flows and less copper demand), are potential negative influences on the copper price.
Sentiments from Junior explorers
According to Ignacio Del Rio, director and general manager of Mineria Activa, investing in projects when commodity prices are low and selling when high may seem obvious but is rarely executed in the industry. Mineria Activa manages private equity investments and purchased the Pampa Camarones copper project in northern Chile when copper prices were around 2$/lb. The project is has now received US$10m financing from Mitsui. His advice to other investors and junior explorers is to avoid marginal projects that are only feasible in a hot market, and do not compromise too much on desired variables.
This sentiment was echoed by other junior explorers, including Solgold, Regulus Resources, and Toro Mining who have all bought and developed projects when commodity prices were low.
Day 2 will see a host of C-suites taking the podium including a Keynote presentation from Robert Friedland, founder and executive co-chairman of Ivanhoe Mines.
See our full list of mining events and conferences around the world in our events section.
Luke Viljoen is a project manager in the extractives sector with several years broad experience in exploration and mining across Africa. He specializes in helping companies solve complex issues in challenging environments. Connect with Luke on LinkedIn or email him directly on lukejv{at}gmail.com
