Copper
Feature Articles
Key Copper Supply Upside
May 2021
AME expects mined copper supply to grow 4.8% on-year in 2021 to 17,219kt and a further 6.8% in 2022 to 18,391kt. Indeed, even though mined copper production has continued to face coronavirus-related disruptions this year, particularly in South America, AME expects supply to grow. Operations will be less hindered by the pandemic, particularly in the second half of the year, while new mines and expansions ramp up.

Chile

Even though state-owned Codelco boosted first-quarter output by 7% on-year to 386kt, with sales more than doubling to US$4.65bn, surging cases of Covid-19 in Chile has slowed project development, such as at El Teniente and Chuquicamata.

However, a recovery is expected in the second half of the year as the virus is increasingly brought under control, CEO Octavio Araneda said in a statement accompanying first-quarter results.

 

 

Codelco kicked off commercial production from its phase one expansion project in January at its El Teniente mine, 15 months ahead of schedule. The faster timeline led to a US$50m saving, the world's top copper miner said. With ore reserves estimated at 157Mt and a copper grade of 0.75%, the new sector—known as Recursos Norte—is expected to contribute about 20% of the ore fed daily to El Teniente processing facilities.

This was the first of a four-phase project to add 50 years of operational life to El Teniente. The next steps, the Diamante and Andesita projects, are both already under construction, and the future Andes Norte project. Once the full expansion is completed in 2023, El Teniente mine’s production is estimated to reach 500ktpa of copper, positioning it among the world’s five largest copper operations.

Meanwhile, BHP's Spence Growth Option (SGO) will ramp up to full production of 300ktpa by the end of this year. The US$2.4bn SGO project includes a new 95ktpa concentrator that will increase payable copper-in-concentrate production by around 185ktpa in the first ten years of operations and will extend the mining operations by more than 50 years.  

Meanwhile, Teck Resources' US$2.5bn Quebrada Blanca Phase 2 (QB2) project will kick off in the second half of 2022. It will produce 316ktpa during its first five years. Teck said early this month that Phase 2 was more than 50% complete.

 

Peru

Anglo American and Mitsubishi's US$5-5.3bn Quellaveco copper mine in Peru is currently under construction and scheduled to begin operations in 2022, ramping up to full production in 2023.

During the first ten years of production, Quellaveco is expected to produce approximately 300ktpa of copper at a cash cost of US$1.05/lb. Quellaveco's ore reserves are estimated at 1.3Bt containing 7.5Mt of copper—enough to power 90m EVs and wire 80m homes, according to Anglo. The project will create 9k jobs in construction and 2,500 in normal operation.

 

 

Anglo inked a deal last month with a subsidiary of France's Engie to power Quellaveco on 100% renewables, as the miner plans to become carbon neutral by 2040.

 

DRC

Phase 1 of Kamoa-Kakula, a 3.8Mtpa mining and milling operation, is on track for first production by the end of May or early June, months ahead of schedule.  

Phase 1 is expected to produce about 200ktpa of copper, rising to a 7.6Mtpa operation in Phase 2 producing 400ktpa in the third quarter of 2022. “The start of production at Kakula marks the beginning of a multi-generational copper mining district, consisting of numerous high-grade mines," said Ivanhoe co-chair Robert Friedland on May 3.

 

 

Given the current copper price environment, Ivanhoe and its partner Zijin are exploring the acceleration of the Kamoa-Kakula Phase 3 concentrator expansion from 7.6Mtpa to 11.4Mtpa, which may be fed from expanded mining operations at Kansoko, or new mining areas at Kamoa North (including the Bonanza Zone) and Kakula West.

Ivanhoe said its phased expansion scenario to 19Mtpa would position Kamoa-Kakula as the world's second-largest copper mining complex, with peak annual copper production of more than 800kt. The biggest producer is the BHP-operated Escondida mine in Chile, which recorded copper output of 1.2Mt in FY20.

Kakula is the first of multiple high-grade mining areas planned on the 400-square-kilometre Kamoa-Kakula mining licence. The copper project is a joint venture between Ivanhoe (39.6%), Zijin Mining Group (39.6%), Crystal River Global Limited (0.8%) and the DRC government (20%).

 

China

Tibet Julong Copper Co Ltd's Julong copper mine in China will begin producing this year, with annual production of 165kt of copper and 6.2kt of molybdenum.

Phase I of the Qulong copper-polymetallic mine is moving forward as planned and is scheduled for commissioning by end of 2021, Zijin said last month.

Zijin Mining Group purchased a 50.1% stake in Tibet Julong Copper Co Ltd for RMB3.9bn (US$549m) in June last year, giving it control of the largest copper mine in China. During the same month, Zijin also agreed to buy Toronto-listed Guyana Goldfields for C$323m (US$238m). In February 2020, Zijin completed its C$1.3bn acquisition of Colombia-focused Continental Gold.

The Chinese miner produced 127kt of mined copper in the first quarter, up 104% on-year, while earnings reached RMB 4.35bn (US$672m), up 140% on-year.

 

Serbia

Zijin Mining Group said its Upper Zone of its Timok copper-gold mine in Serbia, which it refers to as Čukaru Peki, will begin producing this year.

The company said in April that the development was progressing as planned. The processing plant is entering into equipment commissioning and solo test-run stages and is expected to be put into production at the end of June, Zijin said.

 

 

Once up and running, Zijin expects annual production of 79.6kt of copper metal and 2t of gold metal. The Upper Zone possesses 1.05Mt of copper metal, grading 3.7g/t in average and 68t of gold metal, grading 2.4g/t in average. Meanwhile, the development of Timok's Lower Zone has not yet commenced. It has inferred resources at 14.3Mt of copper metal grading 0.86% and 299t of gold metal grading 0.18g/t.

Serbia Zijin Copper Doo Bor achieved revenue of US$222m in the first quarter, up 87.39% on-year, while its earnings increased by 198% on-year.  Serbia Zijin Copper Doo Bor has four copper mines—Jama, Majdanpek, Veliki Krivelj and New Cerovo.

Zijin owns a 100% stake in Timok after acquiring Nevsun Resources and then Freeport-McMoRan's stake in the Lower Zone in 2019. In addition, Zijin holds than 20 exploration licenses in Serbia and Balkans.

 

Russia

The Udokan copper integrated mining and metallurgical project (MMP) in Zabaikalye, Russia, is expected to come online in 2022.

Russia's largest untapped copper deposit is owned by Udokan Copper (formerly Baikal Mining Company), part of USM holding founded by Uzbek oligarch Alisher Usmanov.

 

 

Once completed, it will produce copper cathode and sulphide concentrate totalling 125ktpa, according to the company. JORC reserves are estimated at 26.7Mt of copper, with concentration of copper in ore amounting to 1%. Udokan MMP will become the first Russian enterprise to use hydrometallurgy / electro winning technologies for copper ore processing, the company said.

The sixth and final ore-grinding mill has been installed in the grinding department, the company said in its latest press release in April. During the previous month, Udokan said that construction of the 2.8km crushing and conveyer complex would be completed by the end of this year, reading for testing.

Udokan said at full capacity, the plant would provide 2,500 jobs and additional 20k jobs in related industries, and up to 10% of the region's GDP.