The Looming Copper Supply Crunch
This infographic is presented by Western Copper & Gold
Copper is among the three most used metals in the world, and high quantities of the red metal must be mined every year to meet global demand.
The market for copper is equal to approximately $120 billion each year, which rivals that of even iron ore, the most widely traded metal. This is because infrastructure, technology, and automobiles consume massive amounts of copper.
Behind silver, copper is the second best metal for conducting electricity. That’s why 75% of copper is used in electrical wires or for wiring in machinery. From power grids to motherboards, copper wire is indispensable to modern society.
Copper is also essential for green energy and a sustainable future. For example, each generation of car needs more copper wiring: a gasoline-powered car needs 55 lbs, while hybrids and electric vehicles need 110 lbs and 165 lbs respectively. Further, it is estimated that an average of 3.6 tonnes of copper is used for each MW of wind power.
The Copper Supply Problem
The problem is: copper is not being discovered fast enough to meet upcoming demand. A study by Wood Mackenzie found that there will be a 10 million tonne supply deficit by 2028. That’s equal to the annual production of the world’s biggest copper mine (Escondida) multiplied by a factor of ten.
There are several reasons for this.
First, it now takes longer to go from discovery to production than ever before in the mining industry. Geological, environmental, and political challenges have brought the average lead time to around 20 years for new mines.
Beyond all of the challenges above, the economics also have to line up. Thomson Reuters GFMS estimates that for new copper supply to be incentivized to come online, the copper price must be $3.50 per pound.
Copper mining is all about grade or scale. The majority of global output comes from mega mines that have massive economies of scale to reduce costs. However, it has been a long-running trend that the grades for these established mines are dropping.
A good example of this is Escondida, the world’s largest copper mine which is located in Chile. It produced 6% of global copper output in 2014, but the mine is facing a similar problem to that of other large copper projects: grades are dropping. In 2007, the copper grade was 1.72%, but it is predicted to drop to half of that in upcoming years. In fact, BHP Billiton is expecting a year-over-year decline of 24% between 2015 and 2016.
Codelco is the world’s largest copper miner overall, and has recently announced a $25 billion investment plan to expand aging mines. It will spend $5 billion each year, but it expects no significant gain in production for its efforts.
The Coming Supply Gap
Add these factors together, and stocks of copper are at their lowest levels since 2008. Further, 4% of the world’s copper mining capacity falls off the table each year, which means that this must be replaced somehow.
With 10 Escondidas needed to fill a 10 million tonne supply deficit by 2028, metals investors need to stay vigilant as changes in the market will be coming.
The Periodic Table of Endangered Elements
90 different elements form the building blocks for everything on Earth. Some are being used up, and soon could be endangered.
The Periodic Table of Endangered Elements
The building blocks for everything on Earth are made from 90 different naturally occurring elements.
This visualization made by the European Chemical Society (EuChemS), shows a periodic table of these 90 different elements, highlighting which ones are in abundance and which ones are in serious threat as of 2021.
On the graphic, the area of each element relates to its number of atoms on a logarithmic scale. The color-coding shows whether there’s enough of each element, or whether the element is becoming scarce, based on current consumption levels.
|C||Carbon||Plentiful supply / serious threat|
While these elements don’t technically run out and instead transform (except for helium, which rises and escapes from Earth’s atmosphere), some are being used up exceptionally fast, to the point where they may soon become extremely scarce.
One element worth pointing out on the graphic is carbon, which is three different colors: green, red, and dark gray.
- Green, because carbon is in abundance (to a fault) in the form of carbon dioxide
- Red, because it will soon cause a number of cataphoric problems if consumption habits don’t change
- Gray because carbon-based fuels often come from conflict countries
For more elements-related content, check out our channel dedicated to raw materials and the megatrends that drive them, VC Elements.
Mapped: The 10 Largest Gold Mines in the World, by Production
Gold mining companies produced over 3,500 tonnes of gold in 2021. Where in the world are the largest gold mines?
The 10 Largest Gold Mines in the World, by Production
Gold mining is a global business, with hundreds of mining companies digging for the precious metal in dozens of countries.
But where exactly are the largest gold mines in the world?
The above infographic uses data compiled from S&P Global Market Intelligence and company reports to map the top 10 gold-producing mines in 2021.
Editor’s Note: The article uses publicly available global production data from the World Gold Council to calculate the production share of each mine. The percentages slightly differ from those calculated by S&P.
The Top Gold Mines in 2021
The 10 largest gold mines are located across nine different countries in North America, Oceania, Africa, and Asia.
Together, they accounted for around 13 million ounces or 12% of global gold production in 2021.
|Rank||Mine||Location||Production (ounces)||% of global production|
|#1||Nevada Gold Mines||🇺🇸 U.S.||3,311,000||2.9%|
|#5||Pueblo Viejo||🇩🇴 Dominican Republic||814,000||0.7%|
|#6||Kibali||🇨🇩 Democratic Republic of the Congo||812,000||0.7%|
|#8||Lihir||🇵🇬 Papua New Guinea||737,082||0.6%|
|#9||Canadian Malartic||🇨🇦 Canada||714,784||0.6%|
Share of global gold production is based on 3,561 tonnes (114.5 million troy ounces) of 2021 production as per the World Gold Council.
In 2019, the world’s two largest gold miners—Barrick Gold and Newmont Corporation—announced a historic joint venture combining their operations in Nevada. The resulting joint corporation, Nevada Gold Mines, is now the world’s largest gold mining complex with six mines churning out over 3.3 million ounces annually.
Uzbekistan’s state-owned Muruntau mine, one of the world’s deepest open-pit operations, produced just under 3 million ounces, making it the second-largest gold mine. Muruntau represents over 80% of Uzbekistan’s overall gold production.
Only two other mines—Grasberg and Olimpiada—produced more than 1 million ounces of gold in 2021. Grasberg is not only the third-largest gold mine but also one of the largest copper mines in the world. Olimpiada, owned by Russian gold mining giant Polyus, holds around 26 million ounces of gold reserves.
Polyus was also recently crowned the biggest miner in terms of gold reserves globally, holding over 104 million ounces of proven and probable gold between all deposits.
How Profitable is Gold Mining?
The price of gold is up by around 50% since 2016, and it’s hovering near the all-time high of $2,000/oz.
That’s good news for gold miners, who achieved record-high profit margins in 2020. For every ounce of gold produced in 2020, gold miners pocketed $828 on average, significantly higher than the previous high of $666/oz set in 2011.
With inflation rates hitting decade-highs in several countries, gold mining could be a sector to watch, especially given gold’s status as a traditional inflation hedge.
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