Copper, the critical element for this new age of energy
From our ancient past to our future chapters, the story of copper melds with the story of civilization. Copper was the first metal worked by mankind. It enabled the giant leap in technology from the Stone Age to the Bronze Age. Today it delivers clean water and electricity to our homes. For our future, green energy technologies will demand even greater amounts of this versatile metal.
The story of copper gets particularly interesting for investors when we look at the declining role of the USA to supply its own demand for copper, and the mining companies that show promise to turn that trend around.
Copper is the third most consumed metal in the USA. Copper is not in short supply worldwide. Under 15% of the world’s known resources have been mined so far in human history. However, only a quarter of these may be deemed economic, and 16% of these are in the USA. Recently copper production in the USA has fallen, just when the world is demanding more.
Copper’s gleam in today’s market
Copper’s use today is tied to economic growth. More parts of the world are experiencing growth simultaneously. This provides a good demand base and growth profile for the commodity.
The key factors driving copper’s necessity in today’s world are its own properties: it is conductive, ductile, efficient, recyclable and economic. These properties make copper the key commodity in energy transmission and generation.
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Green energy systems are four to six times more copper-intensive than traditional fossil fuel power generation. Renewable energy systems use many niche elements, but they all use copper for part of their generation and delivery. The continuing push for greener energy supply and usage transition in the green economy is going to happen only with copper as the driver and enabler.
It is estimated that the addition of Renewables and green energy will generate demand for an extra 1.9 billion lb of copper over the next eight years in North America.
Copper is a critical element for this new age of energy. Energy storage systems and batteries for the new green energy transition uses are 25 times more copper intensive than standard lead acid batteries. Electric vehicles use copper in the power cabling, electronics and the electric motors. Hybrid vehicles and electric cars are two to five times more copper intensive than traditional gas-powered cars.
In 2017 the USA imported 40% of its refined copper needs as mine production dropped 12%. Imported copper primarily comes from South America and Africa as well as other regions. This reflects the world production trends that also saw growth into 2016 and dropped in 2017.
Focus on Arizona, USA
Arizona accounts for 69% of USA copper production. While this is a significant part of national production, the number will not go up in the near term. Many of the assets are old and the promising new Rosemont mine in Arizona was just stalled. Despite this challenge, investors may want to watch this company for signs of progress.
Future production in the USA could look better with good copper results coming from Black Diamond Exploration Inc. (BDEI). The junior project is located in the Globe-Miami camp, a key copper production hub with significant processing assets held by major resource companies. Owners of these nearby assets in the camp can accommodate — and want — new feed. BDEI has also reported that two majors are already looking at the BDEI data room. Any discovery at the Black Diamond project will be developed by one of the majors.
Copper’s ability to advance civilization continues today and makes copper an essential element, for both the world and the investor. Within the USA, Black Diamond Exploration Inc. shows promise to supply that demand.
Ronald Wortel, MBA, P.Eng. is a mining investment professional with extensive experience in analysis of companies, projects and markets. He worked as both a sell-side ... <Read more about Ron Wortel>