Record prices on the way? North American executives discuss copper

In spite of the dip in copper prices in September, executives at some North American companies are confident that there could well be record copper prices before long thanks to rising demand, largely because of electromobility and the global energy transition

Representatives of Canada’s Aldebaran Resources and Highland Copper, and the US firm Arizona Sonoran Copper discussed the copper market in a webinar on Friday, organized by Canadian fintech 6ix. 

“We’re in a strange situation where we have a depressed copper price, but there are plenty of good reasons to believe that we’re probably going to have record prices in the not-too-distant future," said John Black, CEO of Aldebaran Resources.

Aldebaran Resources owns the Rio Grande, Aguas Calientes, Oscara, El Camino, La Frontera mining exploration projects in Argentina, among others. 

Copper prices fell to a two-month low in the last week of September, as fears of a global slowdown, weaker demand, a higher dollar and rising stocks in warehouses registered on the London Metal Exchange (LME) sparked a sell-off. 

There is concern about the declines in stock prices around the world, which have affected the price of copper. However, as the metal is critical for the renewable energy market and the electric vehicle sector, as well as related grid and recharging infrastructure, "demand and supply will increase significantly, causing price increases," said George Ogilvie, CEO of Arizona Sonoran Copper. 

There is an imbalance in global supply and demand, particularly in the US, where demand is three times higher than supply. This has shown the urgent need to build more mines, said Barry O'Shea, CFO of Highland Copper. 

“Decarbonization is going to accelerate the demand for metals in Europe. I think it’s going to be exponential within 5-10 years,” said Ogilvie.

The three executives agreed that Latin American governments have begun to focus on the importance of copper and other raw materials for the global energy transition. 

There are strong links between Latin America and North America, and they will tend to grow, said Black, which is important, as collaboration between countries and companies is key to securing the supply chain. 

“[Argentina] has depended a lot on agriculture and other industries, but now there’s very much a realization that mining potentially provides tremendous benefits for the country moving forward and it’s trying to attract investments for mining to improve its economy," he added.  

Black is confident that its Argentine mining projects will continue to advance, but is wary of a shortage of skilled mining labor, such as drilling technicians and geologists. 

“Countries like Argentina insist that we hire local people, which is also our focus as well, but it’s difficult when there aren’t those kinds of professionals in the area." To solve this situation, Aldebaran has committed to take teachers to local communities to improve skills, Black added. 

When asked by BNamericas how many tons of copper the world will need to achieve the global energy transformation, Ogilvie said, “Today we’re using about 25Mt of refined copper per year and the forecast is that in the next 15-20 years, that number will increase to 50Mt." 

The only way to encourage the copper industry to increase supply to meet that demand is through pricing, he added. 

Global refined copper demand will nearly double by 2035 and should reach 53Mt in 2050, and substitution and recycling will not be sufficient to meet the needs of suppliers of electric vehicles, power infrastructure and renewable generation, according to an S&P Global report. 

"The coming supply-demand gap should be a wake-up call to leaders" S&P Global Vice Chairman Daniel Yergin was quoted as saying in the report.

Photo: Webinar 6ix