Copper Production
Securing a domestic supply chain
Copper is undoubtedly one of the most versatile mined metals. It is used in nearly every industry and has become a shining star in the green revolution thanks to its conductive properties. Demand for copper has recently skyrocketed as it is required to modernize aging power generation and transmission infrastructure to accommodate fast-growing renewable sources, including solar PV, offshore and onshore wind, solar power, as well as nuclear and hydropower. Transportation is also electrifying quickly, with electric vehicles (EVs) progressively taking the center stage in most major markets.
Over the next 25 years, demand will only continue to increase as countries try to achieve global climate change ambitions. Studies show that demand will grow dramatically from 25 million metric tons (t) today to about 50 million t by 2035, a record-high level that will be sustained and continue to grow to 53 million t by 2050. If production levels do not increase significantly, demand is likely to remain unmet. Experts agree that substitution and recycling will not be enough to meet the demands of EVs, power infrastructure, and renewable generation. Therefore, unless massive new supply comes online in a timely way, the goal of net-zero emissions by 2050 will remain out of reach.
The US – the world’s fifth largest copper producer with the world’s sixth largest copper reserves at 48 million tons – is uniquely positioned to address the impending supply-demand imbalance. “Looking around the world, many copper reserves and projects are located in risky jurisdictions, which has been one of the challenges to bring on new supply”, explained Stuart McDonald, president and CEO of the North American mining company Taseko Mines, noting that today, almost 40% of copper production comes from Chile and Peru, which are both experiencing political and social instability.
In the past few years, copper production in the US has remained relatively stable despite the global economic rollercoaster. After a decline of 4.8% in 2020 prompted by the pandemic, the nation’s red metal production recovered by 2.5% to 1.2 million t in 2021, mainly supported by rising output from the country’s major producers, Freeport-McMoRan and Rio Tinto. Together, these two accounted for 66.8% of the total production with 821,000 t copper in 2021, up from 783,300 t in the previous year.
In 2021, copper production from Freeport-McMoRan grew by 3% mainly due to the ramp-up from the Lone Star mine in Arizona, which started operations in 2020. “We always knew that Lone Star would be a huge opportunity for us. We were able to get the oxide resources into service and production over the past two years,” revealed Joshua Olmsted, president and COO for the Americas at Freeport.
“Copper is fundamental to achieve our societal goals, whether these are in terms of decarbonization or achieving net zero by 2050. At Freeport, we continue to be optimistic about what that means for the copper market.”
Joshua Olmsted, President and COO Americas, Freeport-McMoRan
Before putting that project effectively into production, the expected annual production was about 200 million lbs/y of copper. Now, according to Olmsted, the company is looking at 300 million lbs/y of copper. “For now, we are focusing on developing that oxide, giving us the opportunity and time to work on engineering and planning for the long term, as it is an operation of large magnitude,” Olmsted continued.
In addition to Freeport-McMoRan, Arizona hosts many other top US and global copper producers, including Capstone Mining Corp, Grupo Mexico, and KGHM, as well as some exciting development-stage projects which could soon be in production and help address the world’s rising copper needs.
Among these development projects, Resolution Copper, a joint venture between mining giants Rio Tinto (55%) and BHP (45%) has been in the spotlight for several years. Located near the town of Superior in Arizona’s famous Copper Triangle and on the side of the old Magma Copper mine site, Resolution is one of the most significant untapped copper deposits today, with an estimated copper resource of 1.787 billion t at an average grade of 1.5% copper. The proposed underground mine is expected to become the largest copper mine in North America, capable of producing up to 25% of US copper demand each year. It is also expected to create 3,700 indirect and direct jobs and contribute about US$1 billion annually to the state’s economy.
While Rio Tinto and BHP have spent US$2 billion, they have yet to produce any copper, as the project has been going through a rigorous – and often challenging - permitting process with the federal government for over a decade. “We had our Environmental Impact Statement (EIS) published on the 15th of January 2021, only to have it rescinded by the incoming Biden administration on the 1st of March of the same year. So, we are in the process of getting the EIS republished,” explained Andrew Lye, project director at Rio Tinto.
Arizona Sonoran’s new resource estimate regarding its Cactus Mine project will likely put the company in the spotlight in terms of copper development projects in the coming months. The resource estimate now puts the project’s total resources at 6.5 billion lbs of copper, which could have a considerable impact on the US domestic copper supply in the coming years. As put by George Ogilvie, principal engineer, president, and CEO at Arizona Sonoran: “We see this project as one of the top five independent copper projects in the US, with the potential to start supplying copper domestically within the next few years.
Another company that has been tied up in permitting delays but stands ready to supply future copper needs is Canada’s Hudbay Minerals. The company recently unveiled a Preliminary Economic Assessment (PEA) for its Copper World Complex in Arizona, which includes recently discovered deposits at the property as well as the Rosemont asset. The document came only two weeks after a US court cleared the path for the company to proceed with its planned Copper World mine.
Meanwhile, Hudbay’s other major copper project in Arizona, the large and neighboring Rosemont, suffered a major setback in early May 2022 after a judge confirmed a 2019 ruling that halted the US$2 billion project on environmental grounds.
“Water is a big focus in Arizona and considering that our mine will take 10 years to build, we have the chance to progressively implement new technologies to increase water efficiency.”
Andrew Lye, Vice President, Resolution Copper
According to Hudbay, Copper World’s two phase mine plan has an after-tax net present value of almost US$1.3 billion and will generate an 18% internal rate of return, based on a copper price of US$3.50/lbs. The Toronto-based miner also said it does not believe any federal permits are required for the first phase of the Complex mine plan as it sits on private land, rather than federal land. On the other hand, Rosemont, the second phase, will require federal permits as it is in the lands of the Forest Service.
“We are currently in the feasibility stage of phase one and we plan to complete the engineering this year. In parallel, we will begin the feasibility studies for this same phase,” summarized Javier del Río, vice-president for South America and the US at Hudbay.
Another project that could soon start contributing to US copper output is Taseko Mines’ Florence Copper asset, which is currently in the final stages of permitting. Its small environmental footprint, low energy and water requirements, limited land disturbance, and numerous site redevelopment opportunities post-closure, represent a new era of American mining.
Florence Copper is designed as a two-phase development, with a production test facility (PTF) being its first phase, followed by the second-phase commercial facility. Taseko built the PTF in 2018 to demonstrate that it could produce copper profitably using the in-situ recovery process, and to prove to the regulators it could operate that mining method safely and in compliance with environmental requirements.
President and CEO Stuart McDonald explained the key differences between in-situ copper recovery and conventional mining: “The big difference (…) is that we are not digging a hole in the ground or tunnelling into the orebody but are actually drilling wells into the orebody and injecting a diluted sulphuric acid solution into it.”
Florence has a unique situation where the ore has already been fractured, allowing the mining solutions to travel through the orebody and recover copper in solution. This copper-bearing solution then gets pumped to surface through recovery wells, where it is processed “Through this technology, we are able to produce pure refined copper right on site, ready to be shipped to the US domestic market without the requirement of further processing,” McDonald explained.
Brent Berg, general manager of Florence Copper, elaborated on how this technology contributes to reduce the environmental impact of the mine: “The in-situ copper recovery method eliminates the need for haul trucks, a mill facility, and a tailings pond as there is no waste rock, and there is very little surface disturbance as you just have a wellfield.”
In sum, the US – and particularly Arizona – are uniquely positioned to address the impending copper supply and demand imbalance thanks to a great geological potential and investor-friendly environment. However, the lengthy and complex permitting process for projects on federal land, as showcased by Resolution Copper and Rosemont, raise serious doubts about the nation’s ability to secure a domestic supply chain, rebuild infrastructure and reach its climate commitments. Policymakers must act decisively to improve regulations and legislation to break its foreign reliance and make domestic mining more accessible and economically viable, always ensuring utmost care for environmental and social standards.