Copper was one of the first metals to be discovered and extracted by man. After iron and aluminium, copper is the third most consumed metal in the world.
December 14, 2021
Copper was one of the first metals to be discovered and extracted by man. After iron and aluminium, copper is the third most consumed metal in the world.
Due to its properties, around three-quarters of its production goes into the manufacturing of electrical wires, telecoms cables and electronics.
The metal is in growing demand as the main raw material in energy infrastructure and green technologies.
If you're interested in learning more about this important metal, read on. In this text we will cover:
The main copper ore (the most abundant and economically significant) is chalcopyrite, a sulphide of copper and iron. Other important sulphides are chalcocite and bornite, as well as oxides such as cuprite and carbonates such as malachite.
Pure metallic copper is extracted from a multi-stage enrichment and beneficiation process, starting with the mining and concentration of low-grade ores containing copper sulphide minerals, and followed by smelting and electrolytic refining to produce a pure copper cathode (a form of copper that is 99.95% pure). Some copper is produced from the acid leaching of oxidised ores.
The main applications for copper ore are:
Copper production is in increasing demand as the ore is the main raw material in energy infrastructure, such as electric vehicle motors, transformers and energy transport.
Electrical applications make up around 66 per cent of annual copper consumption, covering the construction in the use of electrical wiring and pipes and the electrical and electronics industry - all electronic equipment features copper, such as your television and mobile phone.
It is an essential component in the engines, wiring, radiators, connectors, brakes and bearings used in cars and lorries. An average car contains 1.5 kilometres of copper wire, and the total amount of copper varies from 20 kg to 45 kg.
For this reason, copper is an extremely necessary metal in the new green economy: the most economical way of transmitting electricity from solar and wind sources are cables made from the metal, and it is also a fundamental material in power generators and transformers, charging stations and the electric vehicles that use them.
According to analysts at Goldman Sachs, "there is no decarbonisation without copper", and they call the metal "the new oil" (Valor Econômico, 2021). Current forecasts for new wind turbine installations between 2018 and 2028 indicate that more than 3 million tonnes of copper will be consumed in this industry.
According to the latest data from the US Geological Survey, global copper production will reach 2 million tonnes by 2024. The largest production is in the Andes, comprising Chile and Peru.
Chile accounts for 22.72% of the world's copper production and produces around 5 million tonnes a year.
The largest copper producing mine in the world is currently the Escondida Mine in Chile, which is jointly owned by BHP and Rio Tinto. Its name, Escondida, comes from the fact that the main ore body is hidden under hundreds of metres of cover, with no surface outcrops.
Brazilian copper production accounts for 7% of world production and is concentrated in the Sossego, Salobo, Chapada, Caraíba, Niquelândia, Fortaleza de Minas and Americano do Brasil mines.
The most important copper deposit in the country is the Salobo mine, in Marabá (PA), belonging to Salobo Metais, a subsidiary of mining company Vale, which began operating in November 2012. The mine has reserves of around 1.4 billion tonnes of ore.
In this sense, the country has favourable geological potential for expanding copper mining to other regions. Although the majority of ore extraction operations are concentrated in Carajás, the entry of new players has contributed to this process.
In an interview with the newspaper Valor Econômico- Setorial Mineração, Marcos Martins, an analyst at CRU Group, said that this expansion has taken place mainly in the interior of Bahia, such as at the Curaçá complex of Mineração Caraíba, controlled by Ero Copper. Other examples are the Chapada mine in Goiás, recently acquired by Lundin Mining, and Mineração Vale Verde, which aims to develop the Serrote project in the municipality of Craíbas, Alagoas.
Brazil's copper ore production and exports have seen notable growth since the beginning of 2020, after a period of stabilisation in recent years. With the current high prices of the commodity and the rise in the dollar, the market has become attractive to mining companies.
In 2020, Brazil produced 1.3 million tonnes of copper ore, according to ANM data. Brazilian exports totalled around 1.15 million tonnes in 2020, with 75% of this volume corresponding to copper ore, and 25% in the form of sulphides.
According to IBRAM, in the first half of 2021, copper exports totalled 541,000 tonnes, worth US$1.5 billion. Copper export sales totalled US$713 million, a positive variation of 57% in value (dollar) compared to the first quarter of 2020.
The most important factor associated with the evolution in Brazilian copper production and exports is due to increased demand from China, the country's main importer of mineral commodities. Also in 2020, China saw an improvement in the situation of the pandemic in the country, allowing progress to be made in the established crisis and the re-establishment of the production park, resulting in an increase in copper prices, quoted in dollars.
Even with the increase in copper ore exports and production associated with the operation of Vale's new mines, the country's domestic market is still dependent on imports of the commodity, mainly from Chile, Peru, the United States and the Netherlands. The accumulated result for 2021 could, however, reverse this situation in view of the rise in exports seen in the last two years.
In historical terms, since the 1960s the price of copper has risen substantially, with a major peak from the 2000s onwards, reflecting above all increased globalisation and Chinese demand for the commodity.
Overall, 2020 was a good year for copper, although the price of ore suffered a COVID-19-induced drop in early March 2020 - as was the case with most other commodities - and reached a record high in the first half of 2021.
In Brazil, the forecast for investments in the mining sector between 2020 and 2024 is US$32.5 billion, where investments in copper represent 5.42% of the total, according to IBRAM data.
1. Chinese demand: China is the world's largest consumer of copper and other important minerals. Around 47 per cent of the world's total copper is consumed by China alone, which is more than the Americas, Europe and Africa combined. In this context, according to Saulo Liberato, director of Saga Consultoria in an interview with Valor Econômico, "The resumption of Chinese growth, the way the country will deal with the problems linked to the shortage of electricity and the crisis at the Evergrande construction company will set the tone for the pace of growth in the sector in the short term".
2. Mine production: Mine interruptions are another important influence on the price of copper. Typically, disruptions in copper mining are attributed to licensing or labour disputes. For example, when the Escondida mine in Chile faced a labour strike at the beginning of 2017 that interrupted production for several weeks.
However, in 2020 and 2021, the main cause of the drop is linked to the coronavirus pandemic, where many sectors have been affected, above all by the pause in production. An example of this was the effects of the pandemic in the Andean country, which left doubts about its copper production and supply. The impact on the economy is due to the fact that Chile is the largest producer of the metal in the world, as mentioned above.
3. Stock fluctuations: Rising copper stocks can weigh on the price of the metal, while falling stocks can boost the price of copper. Falling stocks in recent years have helped to push copper prices up, with stocks on the Shanghai Futures Exchange (ShFE) and the London Metal Exchange (LME) suffering significant falls. The falls have led to an increase in demand for copper scrap.
(*) Information from Investing News.
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