Copper and Molybdenum in Nevada and the Western US
Nevada and neighboring states keep growing in the copper space
The copper story is tied to the green energy transition. In the US, the southwest is the main protagonist of that unfolding story, with Nevada’s importance in the copper space increasing year after year. Nevada’s copper production increased by 6% between 2020 and 2021, from 69,973 to 74,268 metric tons (t). Accounting for 6% of total US copper production, Nevada’s share is still considerably more modest than its Arizonan neighbor, but it is nevertheless growing: back in 2017, Nevada accounted for just above 1% of domestic production, according to NVMA figures.
Technological innovation is vital for copper miners to expand the life of their mine sites. For the past year, production of the Red Metal has been dominated by the Poland-based KGHM at the Robinson Mine. Robinson, which produced around 124 million lbs/Cu in 2021, saw its mine life expand until 2039 this year, a decade more than initial predictions, partly due to technological improvements at the site. In 2021, operators began using an Epiroc-commissioned autonomous drill, and plan on purchasing others.
Down the line, Vancouver-based Nevada Copper – who owns one of the few new production-ready sources of copper supply in the US - expects to restart its Pumpkin Hollow copper mine in 2023 and completed an optimized “life-of-mine” plan in 2022 focused on accessing the larger and higher-grade stopes of the property.
The upcoming months are likely to be marked by greenfield explorations to further increase copper ounces on Nevadan soil and firmly establish the state as a solid copper player. The strategic importance of further exploration is considerable: The US currently imports 40% of its copper, with this figure forecasted to grow to 80% by 2030. Robinson Mine general manager Amanda Hilton laid down plans to drill more footage in Lane Valley in the summer of 2023. Exploration is underway with multiple targets identified at Pumpkin Hollow for surface copper oxide mineralization in the Tedeboy area. Taking into consideration NGM’s Phoenix mine, in the coming years, besides precious metals and lithium, Nevada is likely to be increasingly known as a key player in the production of the metal driving electric transportation.
Promising increases in production will likely continue to be contrasted by a gloomy downstream smelting and processing outlook in the US in the near term. Asia, particularly China, retains the downstream strategic advantage, with 14 smelters compared with only three in the US. The European Commission highlights that 41% of world copper is processed in China. Smelters and refineries are hard to permit in the US, with the last such facility being built in the 1990s. Exposing this vulnerability, Amanda Hilton said: “We are not in an ideal situation in the US in terms of processing copper. Most copper concentrate must be exported to Asia to be smelted and refined, then have it shipped back to the US. That is a risk for both our business and the industry.”
"Right now, we are not in an ideal situation in the US in terms of processing copper, as most copper concentrate must be exported to Asia to be smelted and refined. I hope we can navigate through permitting hurdles and increase our smelting capabilities."
Amanda Hilton, General Manager, Robinson Nevada Mining Company (KGHM)
A potentially critical need for molybdenum?
Lesser known than other alloys, better understood for their role in agriculture, plant production, and stainless steel, interest in the silvery-white metal has risen in recent months amid concerns about China’s dominance in this market. The metal, 75% of which emanates from copper byproducts, is key for its high temperature and corrosion-resistant properties and is widely used in defense, aerospace, and other critical industries. Research by academia also indicate the metal’s role in the green transition: by 2050, the International Energy Agency estimates that demand for molybdenum will at least double, if not triple, to be used in clean energy technologies.
New Moly LLC is uniquely placed to answer the forecasted growing moly demand. Created in 2021 to combine the Kitsault and Mt. Hope properties, which previously were owned by Avanti Kitsault Mines and General Moly, the firm owns 80% of the Mt. Hope project in Eureka County, Nevada. Mt. Hope is the largest permitted primary molybdenum project in the world, and holds more than a billion pounds of molybdenum in reserves, and boasts a 40-year mine life. Mt. Hope is likely to put Nevada in the spotlight as the home to the third US primary mine of molybdenum behind Freeport McMoran’s Climax and Henderson Mines in Colorado. With a moly market of 600 million lb/y in size, Mt. Hope could represent 5% of the global supply with 35 million lb/y.
Moly has an exceptionally high-melting point, making it an ideal candidate for renewable energy applications, particularly in wind turbines and geothermal power. Some recent solar panels deployed in the US use moly near the bottom of each cell to help transfer the electricity generated from the cell to circuits external to the panel, for instance. Andy Caruso, president, and CEO of New Moly LLC expanded on the importance of the metal for wind turbines: “A typical wind turbine requires about 130 kg of molybdenum per megawatt of installed capacity. Geothermal generation of electricity requires very high-quality steel containing molybdenum.”
"The metal is important in the transition towards a green economy. Last year, the molybdenum market moved into deficit, and the price increased to a 14-year high. As of early January 2023, the price was more than US$32/lb."
Andrew Caruso, President and CEO, New Moly LLC
Looking out West
There is a broader copper story unfolding in the Western US. Preserved from the Arizonan spotlights and Nevadan advances, Alaska, Idaho, and Utah have the potential to have their names associated with major copper production in the coming years. Indeed, all three states were listed in the top five mining jurisdictions in the US for investment attractiveness according to the Fraser Institute. Near Salt Lake City, the Kennecott mine was responsible for 143,000 t refined copper production in 2021, and the firm approved a US$1.5 billion investment to push production up to 2032.
Besides production in Utah, however, perhaps the most interesting story in the west is unfolding at the development stage. Alaska and Idaho both boast projects that could significantly change the copper production picture in the US, and mark key progresses in the drive toward electrification. Development of such projects will likely be prompted by a sense of urgency and necessity for the US government; rising capital and operating costs for new copper projects, the scarcity of new world-class deposits, the time and cost it takes to approve new projects in the country all make an increase in the red metal supply of the magnitude to meet forecast demand very challenging, to say the least.
Most recently, Codelco forecast an 8 million t/y deficit of copper in the coming 10 years. This is despite a surplus expected in the short term, following new projects in South America, Africa, and Asia coming online. Looking medium-term, the Western US could help meet the global supply shortage.
In Idaho, Phoenix Copper’s Empire mine currently sits at the permitting and feasibility stage. Phoenix Copper has spent close to US$30 million on the property since 2017, and the latest data reveal the Empire open pit M&I resource increased from 39,800 t to 172,912 t copper equivalent. Advancing the world-class CuMo project in Idaho, American CuMo Mining Corporation will be a player to watch in the coming years. The molybdenum-copper deposit is known as the largest un-mined open-pit moly project worldwide.
"As we transition the world’s transportation from fossil fuel to electricity, we will have to produce at least 50% more copper, and maybe up to 100% more copper, by 2035."
Ronald Thiessen, CEO, Northern Dynasty Minerals
Looking north, key discussions that will impact the US’ future domestic supply chain of copper are currently being held in Congress. These concern Northern Dynasty Minerals’ Pebble project, the largest undeveloped copper project in the world with over 84 billion pounds of copper in the resources. With recent setbacks from the Environmental Protection Agency and the Transportation and Infrastructure Committee, the first two months of 2023 will be critical for the Alaskan project and the US’ copper production ability.
Striking the balance between environmental protection and the need for a metal necessary to achieve green transition goals is a Cornelian dilemma the US authorities are struggling to resolve. Relying on foreign countries’ resources presents dilemmas of material nationalism, but also – ironically – environmental and social ones. As exposed by Ronald Thiessen, CEO of Northern Dynasty Minerals: “The US does not produce a lot of copper metal, most plants produce copper concentrate, which is about 20-30% copper metal. The rest is dirt, which is sent to China to be refined and processed. China has about 40% of the world’s processing and smelting capacity. We need to move towards much more copper metal production in a country that has the most stringent environmental, social and labor standards, or are we willing to get our metal from a country that has coal-fired plants to create copper metal?”
Nevada produces and develops an abundance of metals needed for the transition economy. State and federal players, associations, and companies are working in tandem to assert the state’s place as a significant player in the EV market by bolstering production and switching the US position of net exporter of copper ore and copper concentrate. Yet, the high investment refineries require, added to the volatility of the commodity and China’s cost-competitiveness means Beijing will likely maintain its grasp on the downstream process in the years preceding net-zero targets, despite calls by Nevada – and Western – miners to bring the whole value chain closer to home.
Photo courtesy of m-kojot via Unsplash