Challenges in Leading the
Green Revolution
Ambitious decarbonization targets set both at governmental and private levels will unlikely be met without overcoming considerable challenges. Recent environmental pushes by the Biden Administration – through the Inflation Reduction Act particularly – are the result of clear objectives in terms of decarbonizing the US economy by 2035. Such initiatives are the result of a sense of urgency, and place an enormous burden on (and opportunity for) the mining industry.
Metals are not only required for electrification and decarbonization for the so-called green transition, but they are also needed to replace traditional infrastructure (roads, bridges, public buildings). The consumption of critical minerals, which are essential in many of today’s clean energy technologies from wind turbines to electric vehicles, is expected to increase sixfold by 2050, according to a scenario published by the International Energy Agency.
As a producing state of key energy metals, such as copper, lithium and silver, Arizona will have a major role to play in the drive towards electrification: the state faces the enormous opportunity – and challenge – of increasing mineral production to meet the country’s burgeoning needs. A July 2022 Study by S&P Global projected that the demand for copper will double by 2035 from 25 million metric tons (t) today to about 50 million t. “Demand for copper is slated to increase 300% by 2050”, stated Andrew Lye, project director of Resolution Copper, which could potentially supply almost 25% of total US copper demand.
But the 2035 decade-long deadline reflects contradictory understandings between the government and key players of the mining industry regarding the time – and capability – to produce the amount of raw materials needed to electrify the economy at scale. “The current administration favors electrification and green energy, but politicians do not appear to appreciate where that copper is going to come from”, stated Jim Norine, director for minerals and metals at Ausenco.
“The current administration favors electrification and green energy, but politicians do not appear to appreciate where that copper is going to come from.” Jim Norine, Director for Minerals and Metals, Ausenco
The ongoing permitting process at the proposed Resolution Copper mine highlights the dilemma of the cost of sustainability to gratify the growing appetite for copper. Local mining associations are aware of the problem. “Currently, even though we are a high-ranking jurisdiction in terms of friendliness to investment and mining, it still takes 10 or 12 years to permit new mining operations,” explained Steve Trussell, president of the Arizona Mining Association, nevertheless, adding: “Arizona will lead as the number one producer of nonfuel minerals.”
Indeed, state and federal approval for a mine in Arizona can take more than a decade, compared to an average of a few years in mining countries like Canada and Australia. In Arizona, proposed mines that could make a significant contribution, such as Hudbay’s Rosemont copper project and Rio Tinto-BHP’s Resolution Copper, have been under development for over a decade. “Developing a project in the US is a long process. It not only involves discovering a deposit, but also showing it can be mined in an environmentally friendly way. This usually means a 10-year period before construction or operations can begin,” summarized Brent Berg, general manager at Florence Copper.
“We currently have a serious shortage of critical minerals that are needed to produce solar panels, wind turbines and electric vehicles. There is deep concern about reliable and sustainable supplies of lithium, cobalt, copper and rare earth elements to support the energy transition,” said Sydney Hay, president of AMIGOS (Arizona Mining and Industry Get Our Support - a trade association of small to mid-size businesses).
Leveraging existing assets through new approaches to business
Faced with the urgent need to increase production of battery minerals, producers and explorers have resorted to exploiting past-producing properties in Arizona. “This will include bringing older mining sites back into production and looking at mining waste, which can hold significant opportunity,” Trussell explained.
One of the most prominent examples of this is Arizona Sonoran Copper Company, which is trying to put the Cactus mine, a former producing open pit mine that operated in the 1970s and 1980s, back into production. The mine, previously owned by ASARCO, closed in 1984 due to the copper price at the time being only US$0.65/lb so that the mine was ultimately uneconomical. “There was still a significant amount of mineralization in the ground, and our PEA issued in 2021 demonstrated a resource of approximately 3.5 billion pounds of copper,” explained George Ogilvie, president and CEO of the company.
But reopening such mines also comes with challenges in terms of updating environmental and water management standards, with companies also having to comply with the Global Industry Standard on Tailings Management since 2020.
“There is deep concern about reliable and sustainable supplies of lithium, cobalt, copper and rare earth elements to support the energy transition.”
Sydney Hay, President, AMIGOS
Meanwhile, public and investor scrutiny of mining activity in Arizona, exacerbated by community tensions at Resolution Copper and at Energy Fuel’s Pinyon Plain mine, has once again highlighted the importance of Environmental, Social and Governmental (ESG) practices as key business drivers. ESG factors were ranked first in consulting firm EY’s 2022 report on business risks and opportunities for the mining industry, with local community impact being deemed as the main area where companies will face increased scrutiny.
Global geopolitical turmoil, from supply chain disruptions, the Ukraine war, and tensions with China, have highlighted the role mining must play as the new facet of domestic energy security. Arizona is strategically placed to lead the US effort.
Arizona is now at the forefront of the energy transition and US global competitiveness. This report will analyze in depth the key opportunities and challenges across the value chain of an industry that is, more than ever, key to fueling society’s main goals.