Recent Business News Round Up: CNBC
Press Releases
June 07 2023: Evolution extends life of Ernest Henry copper mine to 2040 to meet global renewables demand
A major Australian minerals miner has announced a 17-year extension on the life of its copper and gold mine, citing increasing demand from the global renewables industry.
In an ASX statement, Evolution Mining confirmed operations at its Ernest Henry project, in Queensland's North West Minerals Province, would be extended to 2040.
It said a study would also see if production could be significantly enhanced over those 17 years or if the mine life could be extended further.
As copper-hungry industries such as construction, transport, energy and renewables demand more of the red metal, global stockpiles are running low.
It provided Australian producers with a golden opportunity, according to Evolution's managing director and chief executive, Lawrie Conway.
"The demand for copper is really being driven by the focus on renewable energy and the decline in availability of copper in the global market," he said.
"In under 18 months of owning 100 per cent of Ernest Henry, we have doubled copper and gold reserves.
"We're really confident that we have not yet reached the full potential of this mine."
Copper industry on the rise
In 2022, Australia was the sixth largest producer of mined copper in the world, according to the Australian Department of Industry, Science and Resources.
The after-effects of the COVID-19 pandemic, war in Ukraine and inflation continue to impact the growth of the international copper industry.
Despite economic insecurities, Australia's copper export volumes are increasing and are expected to rise 2 per cent on the previous year to 829,000 tonnes in 2023.
Export volumes are predicted to increase even further to nearly 900,000 tonnes in 2024, thanks to increased production from new mines and mine expansions across the country.
A major driver of demand continues to be the global renewables sector.
The sale of electric vehicles, which require five times more copper than a standard car, are expected to reach 18 million units in 2024, up from 10 million in 2022, according to the Department of Industry, Science and Resources.
With COVID-19 and rising costs stifling global productivity, and with fewer copper deposits being discovered, investment bank Goldman Sachs last year predicted that copper demand would increase nearly 600 per cent come 2030.
"We are really excited about the possibility of even further expansion to meet these global demands," Mr. Conway said.
Source: abc.net.au
February 05: Bill Gates- and Jeff Bezos-backed startup discovers large-scale copper deposit in Zambia
KoBold Metals, a California-based metals exploration company backed by billionaires including Bill Gates and Jeff Bezos, said it has discovered a vast copper deposit in Zambia.
The rare discovery of a large-scale copper deposit could help in the global race to secure a supply of materials critical to the energy transition. Copper is in high demand due to its use in renewable energy and electric vehicles.
A spokesperson for KoBold Metals told CNBC on Monday that the company believes its Mingomba copper project in Zambia "will be one of the world's biggest high-grade large copper mines."
"It is Kakula-scale in size and grade," KoBold Metals President Josh Goldman said in a statement shared on the firm's account on social media site X. The giant Kamoa-Kakula copper mine is situated just across Zambia's northern border in the Democratic Republic of the Congo.
Ivanhoe Mines, a Canadian mining company founded by billionaire magnate Robert Friedland, owns nearly 40% of the Kamoa-Kakula copper mine. It has described the complex as "the world's fastest-growing, highest-grade [and] lowest carbon major copper mine." It produced nearly 400,000 metric tons of copper last year.
Zambia is Africa's second-largest copper producer after the Democratic Republic of the Congo.
KoBold Metals says it uses artificial intelligence to create "Google Maps" of the Earth's crust to help find new deposits of copper, lithium, cobalt and nickel.
The Silicon Valley startup's investors include U.S. venture capital firm Andreessen Horowitz, Norwegian energy giant Equinor, the world's largest mining group BHP, and Breakthrough Energy, a climate and technology fund founded by Bill Gates in 2015.
Some of Breakthrough Energy's backers are Bridgewater Associates' Ray Dalio, Virgin Group's Richard Branson, Alibaba's Jack Ma and Amazon's Jeff Bezos.
KoBold Metals has said it aims to start producing copper at its mine in Zambia within 10 years, in a project that could have significant economic ramifications for the African nation.
"What they've discovered is quite phenomenal," said Jito Kayumba, special assistant to the Zambian president on economic, investment and development affairs.
"There is a lot that we as Zambians can look forward to in terms of the announcement of their mine development which should be coming on stream," Kayumba said in a video posted Monday on social media site X.
As part of a rapid uptick in demand for critical minerals, the International Energy Agency has warned that the current global supply falls short of what is needed to transform the energy sector, given a relatively high geographical concentration of the production of many energy transition elements.
Most rare earth reserves are located in China, while Vietnam, Brazil and Russia are also major rare earths countries based on reserve volume.
Source: CNBC
January 25: Commodity markets are in a 'super squeeze' - and higher prices could be here to stay
Global commodity markets are in a "super squeeze" amid supply disruptions and lack of investment - and it's only going to get worse as geopolitical and climate risks exacerbate the situation, HSBC said.
"For some time now we have described global commodity markets as being in a 'super-squeeze,'" its chief economist Paul Bloxham told CNBC.
A commodity "super squeeze" is denoted by higher prices driven by supply constraints more than a robust growth in demand, he explained.
"If it's a supply constraint that's driving high commodity prices, it's a very different story for global growth," said via Zoom. Higher prices as a result of a super squeeze are "not as positive."
"We see the deeper 'super-squeeze' factors on the supply-side as still set to play a key role in keeping commodity prices elevated," he said, outlining factors like political uncertainties, climate change and the lack of investments into the green energy transition.
Geopolitical risks include the ongoing Israel-Hamas conflict in Gaza and the Ukraine war, which have hampered global trade, as seen in shipping disruptions from the recent Houthi attacks in the Red Sea.
Another reason is climate change, which disrupts supply chains as well as commodities supply, especially in the agricultural space.
"The super squeeze could be deeper, or more prolonged if geopolitical, climate change or energy transition related supply disruptions are larger than expected," he added. Lack of investments
The world's pursuit of a net-zero carbon future is fueling demand for energy transition metals such as copper and nickel, Bloxham pointed out.
However, there are insufficient investments allocated to procuring these critical minerals, leading to a sharper supply squeeze on energy transition metals - in particular copper, aluminum and nickel, he said.
As energy transition ramps up, markets could be looking at a shortage of a slew of metals like graphite, cobalt, copper, nickel and lithium in the next decade, the Energy Transitions Commission said in a report in July.
At the recent COP28 climate change conference, more than 60 countries backed a plan to triple global renewable energy capacity by 2030, in what is largely deemed as a step forward for energy transition and a further boost in demand for metals required for that transition.
"Large-scale mining projects can take 15-20 years, and the last decade has seen a lack of investment in exploration and production for key energy transition materials," the report said.
Annual capital investments in these metals averaged $45 billion in the last two decades, and must rise to around $70 billion each year through to 2030 to ensure an ample stream of supply, according to the ETC report.
Without more investment in new capacities, supply will be constrained, HSBC's Bloxham said, adding that "for any given amount of demand," it should be expected that commodity prices will stay more elevated than in the past.
"That seems to be playing out across many of the commodities at the moment."
Technology could also be a gamechanger if a development came along and made it much easier to extract the metals used in the battery space, Bloxham added.
He did not say how long it will take global commodity markets to move out of the squeeze, but one way out of it - which would also push commodity prices lower - is a "bigger and deeper [economic] downturn globally," he said.
"Commodities are notoriously volatile asset classes, with a long history that is prone to a short squeeze and the current landscape points to more of the same," said Brian Luke, senior director and head of commodities at S&P Dow Jones Indices. He highlighted that extreme weather events and geopolitics have also impacted the agricultural and energy commodity baskets. Metals most impacted
Analysts say metals will likely see the most upside.
Bloxham noted that aside from clean energy metals, iron ore was also on his list due to falling inventory and a lack of investments into expanding capacity.
Iron ore has seen a price jump of over 24% in the last year, according to data from FactSet.
January 02: Copper could skyrocket over 75% to record highs by 2025 - brace for deficits, analysts say
Copper prices are set to soar more than 75% over the next two years amid mining supply disruptions and higher demand for the metal, fueled by the push for renewable energy.
Rising demand driven by the green energy transition and a likely decline in the U.S. dollar in the second half of 2024 will push copper prices higher, according to a report by BMI, a Fitch Solutions research unit.
Markets are banking on the U.S. Federal Reserve to cut rates this year which will weaken the dollar and in turn make the greenback-priced copper more attractive to foreign buyers.
"The positive view for copper is more on macro factors," Bank of America Securities' head of Asia -Pacific basic materials, Matty Zhao, told CNBC, citing likely Fed rate cuts and a weaker U.S. dollar.
Additionally, at the recent COP28 climate change conference, more than 60 countries backed a plan to triple global renewable energy capacity by 2030, a move that Citibank says "would be extremely bullish for copper."
In a December report, the investment bank forecast that the higher renewable energy targets would boost copper demand by extra 4.2 million tons by 2030.
This would potentially push copper prices to $15,000 a ton in 2025, the report added, way higher than the record peak of $10,730 per ton scaled in March last year.
"This assumes a very soft landing in the U.S. and Europe, an earlier global growth recovery, significant China easing," Citi analysts said, while also emphasizing on continued investments in the energy transition sector.
A growing economy tends to boost demand for copper, which is used in electrical equipment and industrial machinery. The metal's demand is considered a proxy for economic health.
Low supply, high demand Copper on the London Metal Exchange was last trading at $8,559 a ton.
The base metal is a linchpin in the energy transition ecosystem, and is integral to manufacturing electric vehicles, power grids and wind turbines.
Source: CNBC
October 01 2023: China's demand for oil and copper is 'booming,' says Goldman Sachs
China's demand for many major commodities has been growing at "robust rates," Goldman Sachs said in a recent note.
The investment bank observed that China's demand for copper has risen 8% year on year, while appetite for iron ore and oil are up by 7% and 6%, respectively, all beating Goldman's full-year expectations.
"This strength in demand has largely been tied to a combination of strong growth from the green economy, grid and property completions," the Goldman report observed.
While China's embattled property sector is still struggling to recover, the investment bank noted that China's green economy has shown "significant strength" so far this year, resulting in a demand surge for metals related to the green transition, such as copper.
Goldman's economists attributed China's green copper rush largely to its onshore solar installations, which in 2023 so far have "amounted to the level of all previous years' installations."
China's operating solar capacity has reached 228 GW, more than the rest of the world combined, a June report by the Global Energy Monitor said. And the world's second-largest economy is on track to double its wind and solar capacity five years ahead of its 2030 goals.
According to data collated by Goldman Sachs, China's green copper demand rose 71% in July from a year ago.
"The most significant strength has come on the renewables side where related copper demand is up 130% y/y year-to-date, led by surging solar related demand," Goldman wrote in a separate report dated Aug. 25.
Recovery in China's manufacturing sector is also boosting demand for base metals like aluminum.
"The improvement in manufacturing trends so far in Q3 has also coincided with stronger import levels of base metals," the report stated.
China's industrial production grew by 4.5% in August compared to a year ago, beating expectations for 3.9% growth. And within that category, the value added of equipment manufacturing grew 5.4% year on year.
Goldman predicted demand growth for these metals is set to continue.
"We see a supportive underpin into next year for onshore aluminum and copper demand, given the current positive drivers are sticky," the report forecasts.
China's oil demand has also been rising on the back of a "rapid recovery" in oil-intensive services sectors such as transportation, although the analysts said a dip could be on the horizon.
"China's demand for oil has been supported by record internal mobility, as indicated by robust congestion and domestic flight data," Goldman observed.
"In our view, this robust level is sustainable, although we expect growth to decelerate significantly next year."
Commodities as a 'better bet?' The surge in commodities comes in spite of a wider, faltering macroeconomic growth story in China.
"You're actually seeing commodities responding to the [People's Bank of China's] monetary expansion while the Chinese stock market is still trying to find the bottom," said Grow Investment's chief economist Hao Hong.
"So you're seeing a huge split between the two asset classes," Hong told CNBC on Tuesday.
The PBOC recently announced it will continue to boost macro policy adjustments, maintaining stable credit expansion and sufficient liquidity.
"Traders right now in the Chinese market are seeing commodities as a better bet on sort of a marginal improvement in the Chinese real economy going forward," he observed.
Source:CNBC
September 27 2023: Copper is critical to energy transition. The world is falling way behind on producing enough
* Demand for copper could nearly double by 2035, and mining companies are having a hard time keeping up.
* Copper's role in energy transition has led to bullish bets on the metal, but at the same time, multiple forces in politics and the market are making moves that could destroy demand.
* The current shortfall and complicated outlook for miners, including Freeport-McMoRan and Rio Tinto, threaten to not only hamper growth in clean energy but also short-circuit the goal of net-zero emissions by 2050, the benchmark in staving off climate change calamity.
Doctor Copper, the nickname for the ubiquitous red metal that historically has taken the pulse of the global economy, is currently busy diagnosing the health of the clean energy transition. Naturally conductive copper
is one of the critical minerals - along with lithium, cobalt and nickel - in the manufacturing of electric vehicles, EV batteries, solar panels, wind turbines and the power grids that connect renewable sources to homes and businesses. Yet the prognosis for the industry to supply enough copper to meet that rapidly growing demand is not particularly rosy.
Recent reports from S&P Global, Wood Mackenzie, the International Energy Agency and other researchers conclude that while demand for copper could nearly double by 2035, mining companies are having a hard time keeping up. That shortfall threatens to not only hamper growth in clean energy but also short-circuit the goal of net-zero emissions by 2050, the benchmark in staving off climate change calamity. Solutions to the problem include improving existing mining operations, developing novel extraction technologies, and stepping up recycling efforts.
At the same time, because copper reserves are finite, the industry "needs investment to continue and decisions to be made on [new] extraction projects in order to meet future growth," said Nick Pickens, research director of global mining at Wood Mackenzie. "Despite the fact that we've had pretty high copper prices over the last year or two, we're not seeing the rate of sanctioning [of new projects] needed to fill that supply gap," he said.
In the meantime, copper customers, in anticipation of shortages, are either delaying clean energy projects or reducing their need for copper, an economic principle known as demand destruction. For example, higher costs for materials including copper and supply chain snags have slowed the growth in offshore wind projects. Engineering innovations are allowing Tesla and other EV makers to reduce the amount copper in their vehicles and batteries.
Politics might also play a role in demand destruction for copper. A group of conservative organizations led by the Heritage Foundation, eyeing a Republican victory in the 2024 presidential election, have drawn up Project 2025. Among other actions, it would dismantle most of the clean energy projects initiated by the Biden Administration. And on September 20, U.K. Prime Minister Rishi Sunak cut back many of Britain's commitments to mitigate climate change, including a delay in banning sales of new vehicles powered by gas or diesel to 2035 from 2030, impacting the auto industry's deep investments in EVs. A 'striking' lack of copper production and new era of demand
Richard Adkerson joined Phoenix-based Freeport-McMoRan, one of world's largest copper mining companies, in 1989 and became CEO 20 years ago. During that span, he's witnessed the cyclical nature of copper tied to the ups and downs in the world economy. "Copper was the commodity most closely correlated to industrial production," he said. "When business cycles would turn up, copper inventories would fall and prices would go up. Resources were known to exist, investment would occur, inventories would build and prices came down."
Around the time Adkerson took the reins at Freeport, China was emerging as an industrial superpower and dominant consumer of copper for its burgeoning solar, wind and EV industries, adding "a whole new dimension to demand that wasn't there previously," he said.
