Increasing copper demand bodes well for Montero
November 4, 2022The development of copper projects like Montero’s Avispa project in Chile is supported by the positive outlook for copper in the medium and long term. Dr Tony Harwood, CEO and President of Montero Mining and Exploration, explains why copper is critical to the new green economy.
Q: What is driving the positive outlook for copper – is increasing demand for the metal mainly due to the manufacturing of electric vehicles and the infrastructure needed for this type of car?
A: The positive outlook for copper is certainly driven by the huge global move to the electrification of cars. This is not yet reflected in the copper price even though physical supplies of copper are extremely tight at the moment. The recent decline in copper prices reflects short-term investor concerns about the global economy, weak data from China, the European energy crisis and the strong US dollar. However, major copper producers are seeing continued demand and no cut back on orders. The medium- and long-term outlook for copper prices is very positive.
Q: Is copper a battery metal and resource that is critical to the economy?
A: Yes, copper is a critical metal for the green economy as we move increasingly to global electrification replacing fossil fuels. It has been shown that copper can replace lithium in batteries but it is the metal’s high level of electrical conductivity that gives copper a major advantage over all other metals. This is the reason why copper is used in all electrical motors, transmission lines and almost anything electrical found in the home or used in industry. The only other metal that boasts better electrical conductivity is silver, which is expensive. The relative lower cost of copper makes it a more viable option and therefore it is a critical metal in the new green economy.
Q: How long does it take for copper supply from projects like Avispa, Montero’s copper project in the Atacama, to come online?
A: This is a process that can take five to ten years. The speed depends on many factors but the major drivers are the copper price and the quality of the deposit. A drill discovery is followed by further drilling to delineate the resource. More drilling leads to resource estimation, the pre-feasibility study stage and then a definitive feasibility study. If the feasibility study is positive, a construction phase is completed before the mine is commissioned and copper production begins. All these phases involve raising capital through equity placement followed by raising capital through a combination of equity and debt.
Q: What is happening on the ground in copper-rich Chile – is there a scramble for copper resources by the major miners and even car manufacturers?
A: Copper, often called the bellwether metal as it is a barometer of global economic health, is a metal vital to the green energy transition. Demand for it has been growing globally, and research by Wood Mackenzie indicates that end-use copper demand for electric vehicles will likely jump from about 600,000 tonnes in 2021 to around 2.9 million tonnes copper over the next decade. The copper majors need to develop new copper mines to fill this gap in global supply which means they need to acquire good copper exploration projects to develop into mines. Chile is at the forefront of global copper exploration as almost all major copper producers have operating mines in Chile, which is the world’s leading copper producer.
Q: What makes the Avispa project attractive to majors who are earnestly looking to acquire copper projects?
A: Avispa is an early-stage copper-molybdenum project where Montero is developing drill targets. It is located in a prolific copper-molybdenum belt that has yielded very large and profitable mines. These include the Spence and Sierra Gorda copper mines situated barely 50 km to the south of Avispa. Our exploration targeting continues to add value to the project as seen in our recent press releases showing a coherent porphyry target in the south of the license area.
Q: Is the investment in ESG-compliant mining and metals that’s needed for the energy transition gaining traction yet?
A: In my exploration career, ESG has always been an important part of any business involving the exploration and mining of metals. ESG can take many forms and it certainly is gaining greater importance and visibility in the mining sector but it has been a priority for many good mining companies for many decades.