• Author Diana Kinch 
• Editor Richard Rubin 

HIGHLIGHTS

New copper supplies seen critical for energy transition.
Widespread opposition to new mine projects worldwide.

London — Policymakers are becoming increasingly aware that environmental, social and governance issues may stand in the way of development of new mine projects to feed the growing “green revolution,” Jeremy Weir, executive chairman and CEO of global commodities trader Trafigura, said June 15.

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“Unless we address that, we’re going to have a serious problem,” Weir said in an interview session during the Financial Times Global Commodities Summit. “Metals intensity is going to be enormous as we construct the infrastructure for energy transition.”

Companies in Asia and increasingly in Europe are striving to source metals including copper and cobalt to meet demand for batteries for electric vehicles and their charging infrastructure, the executive noted.

“If we want to electrify, we need copper and so we need to find a solution to the problem … we need to be far more efficient in developing new resources,” Weir said. There has been a recent lack of investment in the mining sector and current high prices could be one incentive to boost supply and speeding up production availability, he indicated.

LME cash copper prices closed at $9,900/mt June 14, close to an all-time high and nearly double the $5,646/mt of a year ago.

Five times as much copper is used in electric vehicles as in internal combustion engine vehicles, according to Weir. Copper supply may need to increase by 10 million mt by the end of the decade to meet demand in what could potentially be a 30 million mt market by that time, but so far only 5 million mt extra capacity is expected to come on stream, indicating a significant deficit. It takes five-15 years to set up a new mine, taking into account responsible consultation and permitting times, he said.

Opposition by governments, communities

Opposition to new mining projects is perceived to have grown in recent years due to fatal accidents and infringement of historic land rights, while the desire by local governments and communities to charge high taxes on international investors or else confiscate their operational rights has stalled several projects. Two iron ore tailing dams, operated by major miners Vale and BHP, collapsed in Brazil over the last six years, causing a high number of fatalities and production curbs, while Rio Tinto’s destruction of an aboriginal rock shelter in Australia last year led to international protest, the resignation of the company’s then CEO and the establishment of no-go areas for iron ore mining.

Rio Tinto now faces strong local opposition to development of its major Jadar lithium project in Serbia – where the government may hold a referendum to find out citizens’ views on the project – and had approval withdrawn for development of its proposed Arizona, US Resolution Copper mine. Trader Gerald Group recently restarted its Sierra Leone iron ore mine after admitting the government as a stakeholder after a two-year-long permit confiscation. Vale is set to sell its Moatize coal mine operation in Mozambique for a pittance. It has this year pulled out of its New Caledonia Goro nickel and cobalt mine and processor after social and environmental protest has thwarted operations since 2011.

Newmont Mining walked away from a $5 billion gold and copper project in Peru in 2016 following protests over water rights.

Trafigura aims to overcome some of the problems encountered in the mining sector by teaming up with local operators, according to information recently presented by the company. It has set up a joint venture with a New Caledonia community group to operate Goro and has set up an accord with the Democratic Republic of Congo’s state-owned cobalt company to buy and market the country’s entire production of artisanal cobalt, in a move supervised by international NGOs.

The company is a significant trader in copper, and will be also be a significant international supplier of nickel and cobalt which are also important in the energy transition, Weir said.

Original Article: https://www.spglobal.com/platts/en/products-services/energy-transition/global-integrated-energy-model