Australia’s junior explorers to mark a new dawn for global copper supply

With the world well on its way making the revolutionary leap towards renewables and green energy technologies, global demand for copper continues to soar, in line with the ever-growing demand for electric vehicles (EVs) and electrical appliances. 

The soft reddish brown metal is an excellent conductor of heat and electricity while also being inherently malleable, ductile, and resistant to corrosion. Hence the demand given these characteristics.

Yet questions continue to go unanswered as to where the much-needed production will come from.

According to the Department of Industry, Science, Energy and Resources (DISER) March 2023 Resources and Energy Quarterly (REQ) publication, global mined copper production remained stagnant in 2022 hitting almost 22 million tonnes. This was up a marginal 0.8% from a year earlier. 

Global mined copper production is forecast to grow 5.4% to almost 23 million tonnes in 2023, despite ongoing disruptions in major producing regions, in order to fulfil the demand by the growing electric vehicle (EV) market. Yet copper consumption this year world-wide is expected to increase by 2.1% to reach 26 million tonnes. That is a deficit of 3 million tonnes.

So where in the world will this much-needed production of mined copper come from?

South America and the Democratic Republic of the Congo produce a combined 45% of the world’s copper. However, in 2022 production in Chile plummeted by 5.2%, due to the aforesaid myriad of supply disruptions. Mined production in Peru improved 4.9% year-on-year despite its challenges, although whether this growth will continue remains to be seen.

DISER reports recent disruptions in South America include widespread protests in Peru, which were mostly in major copper-producing regions. Adding fuel to this was a fire at Ventanas Port (Chile), heavy rainfall in Indonesia, as well as contractual disputes at Cobre Panama (Panama) and Dikuluwe-Mashamba (Democratic Republic of Congo). 

As a global leader in mining, Australia is one nation that could emerge as a saviour. 

Primed for production

The country currently has about 15 projects within its pipeline out to 2026 poised to produce copper, which collectively could produce 503.5 kilotonnes per annum. DISER reports that an estimated up to $8.87 billion in new capital investment will be needed for these projects to come online. 

DISER reports that in Australia, mined production is forecasted to grow at an average rate of 3% over the outlook period, reaching 927,000 tonnes in 2027–28. However, the report duly notes that there is a projected fall in Australian output from 2027–28.

OZ Minerals’ (ASX:OZL) West Musgrave project is the most significant new project of the 15 poised to come online. West Musgrave is expected to add about 41,000 tonnes of copper capacity per annum when in production.

Additionally, there are several other large projects with a completed Definitive Feasibility Study (DFS) that could come online near the end of the period in Australia. These projects include Develop Global’s (ASX:DVP) Sulphur Springs Copper-Zinc Project in Western Australia, as well as Round Oak Minerals’ Stockman Project in Victoria. Both of these anticipated projects are projected to produce 15,000t of copper annually and are scheduled to come online by 2024. 

On the junior end, one exploration company working to bridge this gap between current copper supply and demand dynamics in the longer term is ASX-listed company Kincora Copper (ASX:KCC), particularly with its Trundle Project in New South Wales.

“That is where new discoveries in good jurisdictions are positioned to significantly benefit and are needed, with the juniors having a much better success rate at making these discoveries”

Kincora Copper President and CEO Sam Spring tells Mining.com.au that the lack of new development to advanced exploration projects, particularly in tier-one jurisdictions like Australia, is becoming increasingly the focus given the upcoming structural deficit and immediate supply side challenges. He says this is resulting in increased reliance on existing brownfield projects and M&A.

“That is where new discoveries in good jurisdictions are positioned to significantly benefit and are needed, with the juniors having a much better success rate at making these discoveries. 

Trundle certainly is well positioned given results to date, its location and position within a brownfield setting to an existing large scale and hungry mine. The ongoing drilling program will help hopefully get Trundle to the next stage, but there needs to be many other juniors drilling and advancing similar scale potential projects given the hurdles and stages for new project development, and the projected scale of the upcoming copper deficits.”

Spring adds that Australia has the second largest resources of copper in the world, which helps illustrate the country’s ‘excellent’ geological endowment and further prospectivity. However, he notes that the country is still not in the top 5 of the largest producers globally.

“There are three clear tier-one copper provinces, the Gawler Craton in SA, Mt Isa in Queensland and the Lachlan Fold Belt in NSW, with considerable recent exploration success in the Paterson region (in WA). The Lachlan Fold Belt certainly benefits from existing infrastructure and depth of cover to these other regions.

There is very strong government support, and existing exploration through-to-mining cultures in WA and NSW to push forward new critical mineral projects.

As such, and given Australia being a tier-one mining and investment jurisdiction, we are well positioned to increase copper supply from existing resources and the project pipeline you mention but also from other advanced exploration projects not already included in that project pipeline beyond 2026.” 

Juniors to take major role

Castillo Copper (ASX:CCZ) is another junior looking to bridge the supply gap. Castillo is currently seeking a joint venture (JV) partnership with a mining company as it progresses both its Cangai Copper Mine and Big One deposit in New South Wales and Queensland respectively. 

The company’s Managing Director Dr Dennis Jensen tells Mining.com.au Castillo hopes to complete holding talks for its Cangai mine by the end of the year in order to work towards potential production. Jensen says the company, like many juniors, has a part to play in satiating the world’s demand for copper, and that Australia as a continent will itself play a major role where copper is concerned. 

“We’ve obviously got a part to play. Certainly in the immediate future, we could play a role in playing our part towards satiating the world’s copper demand”

“We’ve obviously got a part to play. Certainly in the immediate future, we could play a role in playing our part towards satiating the world’s copper demand. But in the longer term, I think that there’s potential with the sort of continent that we have, for us to play a more major role as far as copper is concerned.”

Meanwhile, Helix Resources (ASX:HLX) has the Collerina, Rochford Copper Trend, and Canbelego joint venture (JV) projects in its portfolio, the most advanced being the latter, which has a 1.5Mt resource. This project has been ‘aggressively’ drilled over the past 18 months through both reverse circulation (RC) and diamond drilling. According to company Managing Director Mike Rosenstreich, Helix is expected to release a new mineral resource update during the June quarter of 2023. 

Another company looking to join the fray is Cohiba Minerals (ASX:CHK), which has its sights set on investing in the resource sector through direct tenement acquisition, joint ventures (JVs), farm in arrangements, and new project generation. With both the South Australian-based Olympic Domain and Wee Macgregor projects in its exploration arsenal, the company has been primarily focused on exploring and advancing both the Pernatty C and Horse Well (Pernatty B) tenements. 

Growing EV market remains major driver

As has been well-documented, such junior exploration plays will be vital in the supply of copper on the back of the growing EV market, which continues to be a major driver of copper demand.

EVs have been at the centre of the global decarbonisation stage the past decade, with sales in the US alone increasing from a mere 0.2% of total car sales in 2011 to 4.6% in 2021, according to the US  Bureau of Labor Statistics.   

This trend has also been noted in Australia, with figures published by the Federal Chamber of Automotive Industries (FCAI) demonstrating 33,410 EVs were reported as sold in 2022, an increase of almost 94% on the previous 17,243 figure in 2021. 

FCAI, which represents the manufacturers and importers of passenger vehicles, light commercial vehicles, and motorcycles in Australia, says battery EVs accounted for 6.8% of sales with 5,932 sold in February 2023, while zero and low emission sales (inclusive of hybrid and plug-in hybrid vehicles) accounted for 13.9%. 

The drive towards a greener future evidently is demonstrating the world’s growing appetite for hybrid vehicles and EVs, which in turn is fueling this demand for copper.

While the world needs near-term production of copper to meet the immediate needs of the world and the transition to net zero emissions, it seems the story that is emerging is the essential role Australian junior explorers will need to take to ensure longer term supply chains.

Images: Kincora Copper Ltd & DISER
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Written By Adam Drought
Born and raised in the UK, Adam is a sports fanatic with an interest in Rugby League and UFC/MMA. When not training in Muay Thai and Brazilian Jiu Jitsu, Adam attends Griffith University where he is completing his final year of a Communication & Journalism degree.