Goldman Sachs\u2019 metals research team has set out its stall on the copper bandwagon, spending much of the post-Covid era how badly we\u2019re boned on supply enough to support the energy transition.<\/p>\n
They see a mammoth 5Mt deficit in 2030 \u2014 this year\u2019s comparatively small deficit is likely to be in the hundreds of thousands of tonnes and already analysts are calling for a copper breakout in the next 12 months.<\/p>\n
With prices briefly touching US$9000\/t before a pullback in the past couple trading days, even iron ore titan Andrew Forrest is being asked when he\u2019ll pull the trigger on developing copper projects his digger Fortescue (ASX:FMG)<\/a> has been exploring in the background for years.<\/p>\n It has taken farm-in positions or stakes in Strategic Energy Resources (ASX:SER)<\/a> and Magmatic Resources (ASX:MAG)<\/a> in recent times. <\/p>\n While they and many other analysts are bullish, we\u2019ve been here before, as Ten Bagger expert John Forwood explained in this month\u2019s investment column.<\/p>\n \u201cSome of the smartest people in the room got it wrong on nickel. Could that be the same with copper?\u201d the Lowell Resources Fund CIO said.<\/a><\/p>\n \u201cWell sure. 10 years ago everyone was forecasting that within two or three years we\u2019d have a massive deficit of copper.<\/p>\n \u201cGroups like WoodMackenzie etc. And here we are 10 years later and the price hasn\u2019t moved much but the forecast looks very similar.<\/p>\n \u201cThe gap got filled by not so much big new projects, and there have been a few, but it\u2019s been smaller projects of ~100,000tpa or less that have come online and expansions of existing projects.<\/p>\n \u201cCan that happen again? Absolutely. Can it happen to keep the price down where it is? You wouldn\u2019t want to bet on it.\u201d<\/p>\n One risk is a new processing technology, and Goldman\u2019s global commodities team has laid its eyes over this externality in a new note.<\/p>\n They think the top 5 copper miners have around 1.3Mt of spare capacity because oxide resources, previously processed via heap leach, have wound down as their mines have aged.<\/p>\n With a technological breakthrough they could deliver 1Mtpa over expected mined supply by the end of the decade.<\/p>\n But the analysts, including Aussie pair Paul Young and Caleb Heiner and commodity research boss Nicholas Snowdon, say that won\u2019t fill the void.<\/p>\n \u201cThe potential 1Mt of extra copper from new leaching technologies is insufficient to close our commodities team\u2019s 5Mt deficit in 2030,\u201d they said.<\/p>\n \u201cOur long-run copper price assumption remains ~US$4.5\/lb (real $, from 2028). In an environment where a broad range of headwinds face the industry in delivering incremental supply, technological breakthroughs are needed to extract more from the installed resource base.\u201d<\/p>\n \u00a0<\/p>\n GS says there are 10 leaching technologies they are following that could make the grqde.<\/p>\n Four of them are commercially proven, including BHP\u2019s (ASX:BHP) Full SaL chloride technique and Bioleach, Freeport\u2019s bio leach and Jetti Resources\u2019 catalyst based chalcopyrite processing method, now employed at Capstone Copper\u2019s (ASX:CSC)<\/a> Pinto Valley and Freeport\u2019s El Ebra and Bagdad mines.<\/p>\n BHP has another iron nitrate leach process in testing at Escondida, while Antofagasta, Anglo American, Freeport and Codelco are all working on their own in-house tech.<\/p>\n Rio Tinto (ASX:RIO)<\/a> meanwhile has backed a start-up called Nuton which it\u2019s hoping to roll out at its Escondida, Kennecott and La Granja sites as well as a host of third party operations.<\/p>\n \u201cLarger-scale trials of new technologies are being conducted at major mines, and within the next 12-18 months we believe the market should have a better sense of the optionality this technology presents,\u201d Goldman\u2019s analysts say. <\/p>\n \u201cFurthermore, this technology (in conjunction with traditional extractive methods via concentrators) could help boost the overall economics of future mine expansions. In fact, with copper at US$4\/lb and challenges with water usage and tailings, we believe that new leach technologies may be able to economically compete with proposed new concentrators like those at Escondida and Bagdad.\u201d<\/p>\n Without the introduction of new technologies, cathode production in the Americas could slide from a 2009 peak of 2.8Mt to half that by 2030.<\/p>\n It comes as China rapidly expands refining capacity, a situation which has seen Chinese smelters agree to cut production temporarily this year to arrest losses caused by decade low treatment and refining charges.<\/p>\n \u201cOur commodities team has previously highlighted that improved primary sulphide leaching and new technologies have the potential to unlock ~1.2Mtpa of copper. That said, we remain cognisant of the challenges facing these technologies \u2013 most are still in their early stages and need to be demonstrated at commercial scale,\u201d GS\u2019 number-crunchers say. <\/p>\n \u201cThere is limited clarity on upfront capex and operating costs as of now, with some of these technology providers structuring the cost as a profit share on cost savings from the technology, which could be a potential disincentive for miners to invest.\u201d<\/p>\n \u00a0<\/p>\n <\/span>\u00a0 The post Even processing breakthroughs won\u2019t prevent a mind-blowing 2030 copper deficit<\/a> appeared first on Stockhead<\/a>.<\/p>","protected":false},"excerpt":{"rendered":"Who\u2019s closing on a solution?<\/h2>\n
Copper miners share prices today:<\/h2>\n\n
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