Copper
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Miners Speed Up Constructions of New Copper Projects
July 2021
Demand for copper is expected to keep rising over the coming years as the global economy electrifies and decarbonises. Miners are speeding up construction of their new copper projects, although they have continued to face coronavirus-related disruptions. After two consecutive years of declines, mainly due to the pandemic-related disruptions, particularly in South America, AME forecasts mined copper supply to grow 3.6% year on year to 21.15Mt in 2021 to and a further 7.3% in 2022 to 22.71Mt. Operations are expected to be less hindered by the pandemic, while new projects ramp up.

In 2021, producers are forecast to add 585kt of mined copper capacity from new projects. The biggest capacity contribution is expected to be Ivanhoe Mines and Zijin Mining’s Kamoa-Kakula mine in the DRC which has started production from the Phase One 3.8Mtpa concentrator in June. The Phase one is forecast to reach full capacity in 2022, producing 200ktpa of copper in concentrate.

The 7.6Mtpa Phase two is under construction and is expected to start production in the September Quarter of 2022, adding additional 200ktpa of copper production. According to the Kamoa-Kakula PEA, the project will expand by phases and finally reach the processing rate of 19Mtpa. The 19Mtpa scenario would position Kamoa-Kakula as the world’s second-largest copper mine, with peak production of more than 800ktpa.

The next three largest new additions in 2021 are BHP’s 200ktpa Spence Growth Project in Chile, Minsur’s 60%-owned 93ktpa Mina Justa in Peru and Cupric Canyon Capital’s 62ktpa Khoemacau in Botswana.

BHP approved US$2.46bn capital expenditure for the Spence Growth Option in August 2017 that will extend mine life beyond 2070. This option involves open-pit mining of the hypogene resource below the supergene reserve and construction of a 35Mtpa concentrator to produce approximately 200ktpa of copper in concentrates.

Construction of Mina Justa started in the September Quarter of 2018. Minsur aims produce 51ktpa of copper in concentrate from a 6Mtpa concentrator and 42ktpa of copper cathode from a 12Mtpa oxide SX/EW plant from 2021.

In Botswana, Khoemacau has produced the first concentrate in July. It plans to ramp up to the full capacity of 155 -165ktpa of high-grade copper concentrate, containing about 60 - 65kt of payable in 2022. Khoemacau is planning an expansion project which is expected to increase production of payable in concentrate to +125ktpa. 

 

 

2022 is expected to be an anomalously strong year for new project capacity. Forecast new capacity in 2022 totals 1,220kt. Major new projects include 300ktpa from Anglo American’s Quellaveco, 275ktpa from Teck’s US$4.7bn Quebrada Blanca Phase Two Concentrator Project, 175ktpa from Baikai Mining’s Udokan, 165ktpa from Tibet Julong’s Qulong and 91ktpa from Zijin’s Timok.

The Quellaveco copper project in southern Peru is jointly owned by Anglo American and Mitsubishi. The development of an open-pit mine and 47Mtpa concentrating operation producing 300ktpa of copper equivalent in the first ten years was approved in July 2018. Capital cost is estimated to be US$5.3-5.5bn. Despite of the COVID-19-related slowdown in 2020, the project is tracking against its original schedule, with the first production still expected in 2022.

In February 2021, Anglo approved the construction of a coarse particle recovery (CPR) plant at Quellaveco. This breakthrough technology will initially allow retreatment of coarse particles from flotation tailings to improve recoveries by ~3%. This investment will also enable future throughput expansion which will bring a reduction in energy and water consumption per unit of production. The CPR project will incur additional capital expenditure of approximately US$130m.

As Quebrada Blanca’s leaching-SX/EW operation approached the end of its mine life in 2018, Teck is developing the hypogene reserve below the mined-out supergene ore which is now developed as the Quebrada Blanca Phase 2 (QB2) project. The US$5.2bn QB2 project includes expansion of the open pit, a 51Mtpa concentrator, desalination and concentrate dewatering plants. Forecast output for the Phase 2 project is 275ktpa of copper in concentrates during the first five years of an initial 25-year mine life. Overall project progress has surpassed the half-way point in April 2021. Teck aims to commence hypogene production in the second half of 2022.

Udokan is the largest copper deposit in Russia, with approximately 27Mt of contained copper in Resources expected to sustain operations until 2065. The mine is designed to extract 13.5Mtpa of ore in Stage 1 producing 65ktpa of copper in concentrate and 110ktpa of copper cathode. Stage 2 expansion will potentially increase its capacity to process 36Mtpa of ore producing 150ktpa of copper in concentrate and 190ktpa of copper cathode. Forecast capital cost is US$5.1bn. The start of construction was announced in September 2018 with production expected to commence in 2022.

In China, Julong Copper’s Qulong Phase One Project is set to start operation by the end of 2021. Copper production from the Qulong Phase One is expected to be 165ktpa. The second phase is designed start in seven to eight years after the phase one starts commercial production, taking Qulong’s total copper production to 260ktpa.

In Serbia, Zijin has started trial productions at its Čukaru Peki Mine—a part of its Timok mine. The Čukaru Peki’s Upper Zone is designed to produce 91ktpa of copper in concentrate. Zijin plans to complete the trial production stage before September this year. The Timok mine is divided into the Upper Zone and the Lower Zone. It contains a very large resource of 1.28Mt of contained copper at grade of 3% and 2.6Moz of contained gold at grade of 1.91g/t in the Upper Zone and 14.3Mt of contained copper at grade of 0.86% and 9.6Moz of gold at grade of 0.18g/t in the Lower Zone.

 

 

AME anticipates 761kt of additional capacity to be sourced from greenfield projects from 2023–2025. The largest new project is expected to be Wafi-Golpu project in Papua New Guinea. The Wafi-Golpu project is owned by a 50:50 joint venture between Harmony Gold and Newcrest Mining. Permitting process of the project has been delayed because of a legal matter between the provincial and national government.

The recent statements by the prime minister of PNG indicate that Wafi-Golpu is priority project ant it will be advanced within the existing legal parameters of PNG. The joint venture partners are encouraged by these statements. Steady production at Wafi-Golpu is estimated at 161kt of copper and 266koz of gold in concentrate over an estimated 28-year mine life with potential to extend to 40 years.  

The Rosemont copper project is located 50km southeast of Tucson, Arizona, in the US. The project was acquired by Hudbay Minerals in 2014 and is at the permitting stage. An open-pit mine and concentrator producing an average 102ktpa of copper in concentrate and 2ktpa of molybdenum in concentrate over a 19-year mine life is planned.

Construction of the Rosemont mine had initially been planned to commence by the end of 2019, with first production by the end 2022. However, the US$1.9bn open-pit copper project has been stalled since the US District Court for Arizona overturned US Forest Service approvals in July 2019. Hudbay is in the appeal process with decision expected for the second half of 2021. AME classifies the project likelihood as probable as the planned operation is reasonably large scale with expected low production costs.