Copper was one of the first metals to be discovered and mined by man. After iron and aluminum, copper is the third most consumed metal in the world.
Due to its properties, around three quarters of its production is destined for the manufacturing industry of electrical wires, telecommunications cables and electronics.
The metal is in increasing demand as a key raw material in energy infrastructure and green technologies.
If you are interested in learning more about this important metal, continue reading this content. In this text we will cover:
- Copper applications;
- Economic context;
- Brazilian overview of this commodity
Copper ore
The main (most abundant and economically significant) copper ore is chalcopyrite, a copper and iron sulfide. Other important sulfides 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, beginning with the mining and concentration of low-grade ores containing copper sulfide minerals, and followed by smelting and electrolytic refining to produce a pure copper cathode (a form of copper that has a purity of 99.95%). Some copper is produced from the acid leaching of oxidized ores.
Copper Applications
The main applications of copper ore are:
- Energy infrastructure: electrical transmission cables and wires
- Electronic equipment
- Civil construction
- Wiring, radiators, connectors, brakes and bearings used in cars and trucks
- Use in medicine as an antibacterial material
- Use in architecture
- Use in musical instruments
- Jewelry and household objects
- Among many others!
Copper production is in increasing demand as the mineral is the main raw material in energy infrastructure, such as electric vehicle motors, transformers and energy transport.
Electrical applications account for around 66% of annual copper consumption, including the construction industry in the use of electrical wiring and piping and the electrical-electronic industry – all electronic equipment contains copper, such as your television and your cell phone.
It is an essential component in the engines, wiring, radiators, connectors, brakes, and bearings used in cars and trucks. An average car contains 1.5 km of copper wire, and the total amount of copper varies from 20 kg to 45 kg.
Therefore, copper is an extremely necessary metal in the new green economy: the most economical means of transmitting electricity from solar and wind sources are cables made of the metal, in addition to being a fundamental material in generators and power transformers, in charging stations and in the electric vehicles that use them.
According to analysts at Goldman Sachs, “there is no decarbonization 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 tons of copper will be consumed in this industry.
Copper: Mineral reserves and producing countries
According to the latest data from the US Geological Survey, global copper production is expected to reach 2 million tonnes in 2024. The largest production is in the Andes, comprising Chile and Peru.
Chile accounts for 22.72% of world copper production and produces around 5 million tonnes per year.
The world's largest copper mine 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 beneath hundreds of metres of cover, with no surface outcrops.
Copper Ore Production in Brazil
Brazilian copper production is responsible for 7% of world production and is concentrated in the mines of Sossego, Salobo, Chapada, Caraíba, Niquelândia, Fortaleza de Minas and Americano do Brasil.
The most important copper deposit in the country is the Salobo mine, in Marabá (PA), belonging to Salobo Metais, a subsidiary of the mining company Vale, which began operations in November 2012. The mine has reserves of around 1.4 billion tons of ore.
In this sense, the country has favorable geological potential for expanding copper mining to other regions. Although most of the 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, mentions that this expansion has occurred mainly in the interior of Bahia, such as in 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.
Brazilian copper ore production and exports have seen notable growth since the beginning of 2020, after a period of stabilization in recent years. With the current high commodity prices and the strong dollar, the market has become attractive to mining companies.
In 2020, Brazil produced 1.3 million tons of copper ore, according to data from ANM. Brazilian exports totaled around 1.15 million tons in 2020, with 75% of this volume corresponding to copper ore and 25% in the form of sulfides.
According to IBRAM, in the first half of 2021, copper exports totaled 541 thousand tons, worth US$ 1.5 billion. Revenue from copper exports was US$ 713 million, a positive variation of 57% in value (dollars) compared to the first quarter of 2020.
The most important factor associated with the evolution in the production and export of Brazilian copper is due to the increase in demand from China, the main importer of mineral commodities from the country. Also in 2020, China achieved improvements in the pandemic situation in the country, allowing progress in the established crisis and the reestablishment of the productive 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 new Vale 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 given the increase in exports observed in the last two years.
Copper and the current economic context of the commodity
In historical terms, since the 1960s the price of copper has risen substantially, with a major peak in the 2000s, which mainly reflects increased globalization and Chinese demand for the commodity.
Overall, 2020 was a good year for copper, although the price of the ore suffered a COVID-19-induced slump 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 mineral sector between 2020 and 2024 is US$ 32.5 billion, with investments in copper representing 5.42% of the total, according to data from IBRAM.
Three factors have important impacts on the supply and demand dynamics of copper (*):
1. Chinese demand: China is the world’s largest consumer of copper and other important minerals. About 47% 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 related to the shortage of electricity and the crisis at construction company Evergrande will set the tone for the pace of growth in the sector in the short term.”
2. Mine Production : Mine outages are another important influence on the price of copper. Typically, outages in copper mining are attributed to permitting or labor disputes. For example, when the Escondida mine in Chile faced a labor strike in early 2017 that halted production for several weeks.
However, in 2020 and 2021, the main cause of the decline was linked to the coronavirus pandemic, which affected many sectors, especially due to the pause in production. An example of this was the effects of the pandemic on 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 previously mentioned.
3. Inventory fluctuations : Rising copper inventories can weigh on the price of the metal, while falling inventories can boost the price of copper. Falling inventories in recent years have helped drive up copper prices, with inventories on the Shanghai Futures Exchange (ShFE) and the London Metal Exchange (LME) experiencing significant declines. The declines have led to increased demand for copper scrap.
(*) information from Investing News.
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Reference
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- Doebrich, Jeff, 2009, Copper–A Metal for the Ages: US Geological Survey Fact Sheet 2009-3031, 4 p., available at https://pubs.usgs.gov/fs/2009/3031/ .
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