February 2022
As the world transitions to lower fossil fuel dependence, demand for copper is expected to continue to grow, given that renewable energy technologies contain up to five times as much copper as their fossil fuel-based counterparts.

Despite growing demand for the red metal, increasing supply through developing new mines is getting harder as governments set stricter permitting and operating conditions and environmentalists and local communities oppose new project development, arguing that mining activities can cause severe environmental problems such as soil erosion, contamination of water and soil and loss of biodiversity.

Copper major Antofagasta’s proposed Twin Metals mine in Minesota, US, for example, has recently been killed by the US Department of the Interior, with the mine’s two mineral leases being cancelled. This has been seen as a win by environmentalists and shows the current administration’s willingness to prioritise conservation. The leases were first granted in 1966 and have since been passed between successor companies. No mining has taken place at the site.

The cancellation of the leases was in addition to a plan announced last year by the White House to impose a 20-year ban on mining in Minnesota’s Boundary Waters region, where the Twin Metals project was located. Environmentalists have long feared mining would pollute the Boundary Waters Canoe Area Wilderness, a 405,000ha preserve on the US-Canada border.

The Twin Metals project is one of two controversial proposed copper-nickel mines in the environmentally sensitive Boundary Waters region of north Minnesota. Along with Twin Metals, PolyMet’s NorthMet project has been subject to numerous court challenges throughout its permitting process. Contrary to Twin Metals, PolyMet Mining secured a legal win last month for the US$1bn NorthMet project after the Minnesota Court of Appeals affirmed nearly all aspects of the water discharge permit for the NorthMet project, overruling six of the seven challenges to the permit made by mining opponents.

Even though the most significant legal issue has now been cleared, PolyMet still has several other legal hurdles to clear in the court of appeals before it can begin mining. The company, whose majority shareholder is Swiss commodities giant Glencore, expressed confidence that it would prevail.

PolyMet Mining has been developing the Northmet project for over a decade. NorthMet marks the first large-scale project to be permitted within the Duluth Complex in north-eastern Minnesota, one of the world’s major, undeveloped mining regions. The deposit will be mined by open pit methods to a depth of approximately 700ft below surface and will reuse existing infrastructure of the former LTV Steel taconite processing site.

It is expected to produce up to 57.7Mlbs of copper—along with 8.7Mlbs of nickel, 311,000 lbs of cobalt, 14koz of platinum, 59koz of palladium, 4koz of gold and 48koz of silver—annually over an estimated mine life of 20 years. Environmentalists have fought the project because of the potential for acid mine drainage upstream from Lake Superior.

 

 

In a similar situation in Arizona, mining giant Rio Tinto’s goal to build its proposed Resolution copper mine has been dealt a blow, with the US Forest Service blocking a land swap granted in the final days of the former President Trump's administration. The decision was a major win for First Nations tribes, who have long opposed the project as the land is considered sacred. Rio has tried for more than a quarter century to launch the Resolution project.

The company and its minority partner, BHP, have invested US$2bn in the project to date, and it remains in the permitting stage. If developed, Resolution would supply a quarter of US copper demand and generate more than US$280m in annual taxes.

Hudbay’s Rosemont project in Arizona is also in an appeal process for permitting. The company is planning an open-pit mine and concentrator producing an average of 102ktpa of copper in concentrate over a 19-year mine life.

Construction of the Rosemont mine was initially planned to commence by the end of 2019, with first production expected by the end of 2022. However, the US$1.9bn open-pit project has been stalled since the US District Court for Arizona overturned US Forest Service approvals in July 2019.

The Pebble project in Alaska has experienced permitting delays as well. The U.S. Environmental Protection Agency (EPA) will reinitiate a process of making a Clean Water Act Section 404(c) determination to protect certain waters in Bristol Bay. If such a determination is finalised, it could permanently block the development of the controversial Pebble project. The EPA took steps to halt the project using that process under the Obama administration, but the agency moved to end that effort in 2019 under President Donald Trump.

Following a Ninth Circuit Court decision, the EPA now plans to request that the 2019 decision be set aside. The Pebble mineral deposit sits near headwaters that support Bristol Bay’s salmon fishery. Its owner, Northern Dynasty Minerals, has pursued the project for two decades. It has faced environmental opposition from the onset.

Not only those new projects across the US have been blocked, but many other mines, including operational mines, in other countries are stalled by activism against mining. In Chile, Gabriel Boric has won the election as the youngest-ever president of the world’s top copper nation. He centred his campaign on promises of greater equality and a greener and more inclusive Chile.

He has called for increased taxes and royalties on the mining industry to expand social services, fight inequality and boost environmental protections. He said he will oppose mining initiatives that destroy the natural environment, such as the controversial US$2.5bn Dominga iron, copper and gold mining project.

In Peru, the second-largest copper producer, communities have long protested against the environmental and social impact of mines in the country. The government in November last year said that it would not approve extensions for four mines due to environmental concerns raised by local communities. Although the government softened its stance afterwards, communities in the Ayacucho region are resolute on mine shutdowns.

Several mines in Peru have suffered from road blockades by communities around their operations. MMG’s Las Bambas, for example, had been blocked for a total of 400 days since the commencement of concentrate transport in 2016. The recent protest at the end of 2021 lasted several weeks and forced MMG to halt operations for over two weeks in December, as ongoing blockades caused the mine to run out of critical consumables.

A similar standoff happened at Glencore’s Antapaccay copper mine. Residents around the mine have been protesting the mine’s environmental impact on the surrounding area over several decades of its operation, as well as opposing the Coroccohuayco project. In response to the protest, Glencore said that it does not plan to execute its Coroccohuayco project at the Antapaccay mine this year or next year.

 

 

With a green energy focus in preparation for a low-carbon future, a huge amount of copper will be needed to develop new and sustainable economy. AME forecasts refined copper demand will grow at a CAGR of 1.9%, reaching 27,587kt by mid-decade, as government stimulus is poured into the copper-heavy infrastructure and power sectors and the global economy electrifies and decarbonises.

However, governments seem unprepared to permit new mines, although they have eagerly made commitments to move towards a net-zero emissions economy, making efforts to stay ahead of the curve. The US appears more focused on looking abroad for metal supplies for with domestic processing into battery parts to meet its growing demand. The strategy was a move by the current administration to shore up support with environmentalists but is counter to its private commitment to miners during the 2020 presidential campaign to allow more domestic mining.

From producers’ point of view, although they face permitting challenges from governments, communities and environmentalists, they still have interests in exploring and developing large-scale projects given skyrocketing copper demand. Producers are hopeful that the appeal of copper for electric vehicles and renewable energy may help mines ultimately get approved.