The Asia Miner

JAN-MAR 2019

The ASIA Miner - Reporting Important Issues to Mining Companies in the Asia Pacific Region

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the asia miner • volume 16 • issue 1 32 FEATURE: Copper the intensity of copper use is predicted to increase, as each incremental unit of efficiency becomes more difficult to a•ain and thus more materials intensive". In short, increased efficiency will require increased copper usage. THE CHINA BEHEMOTH On 15 March 2016, China adopted its 13th Five Year Plan, which covers economic development in mulঞple industries and markets from 2016 to 2020. The plan includes five key copper intensive end-use markets: building construcঞon, power infrastructure, transportaঞon, home appliances, and electronic informaঞon. Analysis of the plan by All China Markeঞng Research, as cited by the ICA, shows an esঞmated 16 per cent increase in copper demand compared to the previous five-year plan. In the sectors analysed, demand for copper is expected to grow from approximately 28 million tonnes to 32 million tonnes. A detailed look at the data shows the power infrastructure sector is expected to see a growth in "copper demand from 4 to 5 million tonnes. Within this sector, China is expected to add 470 gigawa•s of power to its infrastructure," says the ICA. "Thirty-one percent of that new power generaঞon will come from wind and solar PV." The analysis also reveals that the building construcঞon market is forecast to increase 14 per cent, from 12.6 to 14.4 million tonnes. Non-electrical applicaঞons such as heaঞng, venঞlaঞon, and air condiঞoning, hardware, and water and gas will account for "75 per cent of the anঞcipated copper demand". Copper and polluƟon reducƟon in China Coal burning has caused an enormous polluঞon problem in major ciঞes in China, including the chronic smog problems in Beijing. The use of air source heat pumps (ASHP) rather than coal- fired boilers is part of the soluঞon to the polluঞon problem. In partnership with the China Energy Conservaঞon Associaঞon, ICA developed a series of working plans for residenঞal uptake, proposed that Beijing and North China province governments include ASHP water-heaঞng equipment as a renewable energy product in China's 13th five-year building energy conservaঞon plan, worked on industrial standards and specificaঞons for a[er-sale service, and boosted the Product Council's building and technician installaঞon capacity through targeted training. According to the associaঞon, this resulted in 12 key ciঞes in Northern China to invest RMB20 billion (US$3.2 billion) in clean heaঞng. In the case of Beijing, government subsidies are currently 24,000 RMB per ASHP unit, with the remaining 2,000 RMB paid by homeowners. For copper this means an addiঞonal 130kt of copper use between 2017 and 2020. COPPER AND THE CIRCULAR ECONOMY Although copper is easily recyclable and loses none of its characterisঞcs and performance, the global demand and supply for copper is not expected to become a completely closed loop. The Internaঞonal Copper Study Group (ICSG) explains that an increasing global populaঞon and the fact that copper is locked away in end-uses, like wiring and piping, make this unlikely. According to Investment News Network, the annual mined copper producঞon only retreated "seven ঞmes in 65 years – between 1960 and 2015 – and only marginally". Growth of mined copper has risen steadily from roughly 3.9 million metric tons in 1960 to well over 20 million metric tons by 2016, according to the ICSG. <> In 2017, Chile, Peru and China supplied roughly 48 per cent of global mined copper producঞon. Chile, producing 5.3 million tons in 2017, is the largest mined copper producer. Chile's reserves are esঞmated to be a staggering 170,000 million tons and nearly twice that of Peru. A study commissioned by ICA and carried out by the Fraunhofer Insঞtute, tracks copper through ঞme, based on the best available data – both public and proprietary. Results from the study show that in 2015, approximately 440 million tonnes (Mt) of copper were in use worldwide. Well over 26 Mt went into service that year, while approximately 12 Mt of copper contained in discarded products became available for recycling. Collecঞon and recycling of discarded products together with recycling of manufacturing scrap yielded "well over 8 Mt of recycled copper". The study by the Fraunhofer Insঞtute concludes that copper recycling alone cannot saঞsfy demand for copper. The contribuঞon of recycling to global supply, however, can be raised through improved collecঞon and investment in the development and use of be•er separaঞon technologies for discarded products. LOOKING AHEAD While it may be a stretch to suggest that availability of copper is the only factor to impact peak oil demand, it may a very significant one. Copper should be considered vital in three ways: first, it is needed for producঞon of EVs that require a lot more copper than convenঞonal cars. Secondly, it is criঞcal to the mass uptake of plug-in EVs that require significant charging infrastructure upgrades. Finally, without a proper copper supply in place, the uptake of criঞcal ba•ery metals like lithium, cobalt and vanadium may be hindered. Fitch Soluঞons Macro Research, a unit of Fitch Group, expects the global copper market will see a persistent undersupply over the coming years, as global consumpঞon, driven by China's power and infrastructure sectors and increasingly by rising electric vehicle producঞon, conঞnues to outpace supply growth. It notes in its 'Outlook for copper demand' report, that global refined copper demand will outpace producঞon and maintain the market in deficit over the coming year, driven by solid demand from China's power and infrastructure sector and rising global electric vehicle producঞon. It forecast the global refined copper balance to register a deficit of 247 000 tonnes in 2018 and remain undersupplied through to 2021. Over the longer term, Fitch expects the global copper deficit to gradually shrink and the market to shi[ into oversupply between 2022 and 2027, as strong prices incenঞvise producers to ramp up output and invest in new projects. Globally, refined copper producঞon growth will pick up over coming decades as prices improve, the report states.

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