Following up on my thread about the structural change in the #copper market, let’s look at the undeveloped copper deposits that can help increase production.


Most deposits are in South America, and I provide a comprehensive list of those.

1/n
International Copper Study Group presents both the global identified and undiscovered #copper resources in this image. Clearly, South America dominates both categories.
In the tweet below I show 57 large #copper deposits based on the host country and ownership.

2/n
This graph excludes some very big deposits in the US as well as the entire Central African Copperbelt. However, a clear tendency is that majors already own the better projects and Chile/Peru host the majority of those. In addition, Argentina host 3 very large deposits.

3/n
Argentina will grow to have at least 5 very large deposits within the next few years once @filo_mining $FIL.to and @AldebaranInc $ALDE.v update resource estimates for their projects (Filo del Sol and Altar).

Zooming in on South America, this graph really shows how the

4/n
majors already own the best deposits in the big mining countries (Chile and Peru) while juniors typically only hold Tier 1 assets in less proven mining countries like Ecuador and Argentina. The San Juan province of Argentina has been (and is) extremely hot and I believe

5/n
Lundin Minings $LUN.to ability to move their Josemaria project forward will determine whether San Juan/ Argentina becomes even more hot or not. This will be a major turning point for the entire mining industry. Its worth noting that these very big greenfield projects require

6/n
A LOT of capital and will take many years to get into production.
Looking at Chile/Peru it seems like there are multiple of big deposits that can be put into production. However, a lot of the “good” projects have been stalled for YEARS due to lack of infrastructure,

7/n
remote locations, social conflicts etc.
Permitting and building greenfield projects in Chile/Peru is difficult and have become much more difficult in recent years. Politics in both countries have made a substantial move to the

8/n
left with multiple projects and expansions being rejected in Chile lately. In these days, workers at Escondida (world’s biggest #copper mine) threaten to strike. However, it is important to note that Chileans recently voted against a new constitution, which is a very big

9/n
step in the right direction. reuters.com/world/americas…
Let’s see how the next months play out and whether they try to draft a new constitution and how the tax plans go.
In Peru, social conflicts have increased greatly since Castillo became president.

10/n
Most noteworthy are the protests at the Las Bambas mine but other projects have been affected too. However, the tone from Castillo has shifted greatly the last few months and his government want mining companies to invest in the country.

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In my opinion, brownfield projects (and greenfield projects close to infrastructure and in mining areas) in Chile and Peru are necessary and will be needed.
Actually, the Peruvian Finance Minister is trying to launch an economic package where mining is a key part of it.

12/n
“Peru is the world's No. 2 copper producer and Burneo said he wants to facilitate new mines and expansions. He has met with Newmont Mining Corp $NEM and plans to do so again, he added, in hopes of securing its $2 bln Yanacocha Sulfuros project.” reuters.com/world/americas…

13/n
Yanacocha Sulphides is exactly a brownfield opportunity switching from an oxide operation to mining the underlying sulphides. 35km northwest of Yanacocha are AntaKori and CMC located. CMC is currently mining the oxides on top of the TantaKori project and the transition

14/n
must happen in the coming years. As you can see on the chart, TantaKori (that is owned by @IncRegulus $REG.v, $SCCO and $BVN) is one of biggest and best undeveloped brownfield projects in the world. We expect this to be a low hanging fruit once the M&A cycle really begins.

15/n
To sum up, I don’t expect Chile and Peru to fix the coming mismatch between #copper demand and supply. However, I expect both countries to play a big role by majors buying the best/ lowest risk projects and putting these into production. In addition, other countries like

16/n
Argentina, DRC, Zambia, PNG, USA, Canada etc. must approve projects and provide stable politics if the green transition is going happen in a meaningful way. I believe greenfield projects will take too long to permit and build, why majors will buy existing production

17/n
and brownfield projects first.
We will be looking to add to our #copper producers and the best developers with brownfield projects during this downturn and see the coming 3-6 months as a great buying opportunity.

/END

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More from @KampSimonsen

Aug 5
Let’s look at the structural change in the #copper market that will be relevant once the cyclical economic situation has played out in the coming months and IF the energy transition is going to happen in a meaningful way.
Thread below.
1/n
@SPGCIMetals recently released a study that I recommend people to read.
link: ihsmarkit.com/Info/0722/futu…

What is important to understand is that the demand for #copper is going to increase greatly within the coming decades,
2/n Image
which represents a huge mismatch to the supply that is likely going to be available. A mismatch that requires a much higher copper price to solve (solve = make sure new production comes online but also ensure demand destruction to some degree).

Why will supply be lagging?
3/n Image
Read 18 tweets

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