SMM10, March 30 -: According to Deep-South Resources CEO Pierre Leveille talked about his views on the future trend of the copper market in a recent interview. He believes that despite the economic slowdown, copper use will rise as transport is electrified.
Decline of mine taste promotes technical innovation
At present, the average grade of copper ore in the world has a downward trend. For example, the taste of copper produced 100 years ago was 8 per cent. According to a mining intelligence survey conducted in 2017, the global taste in copper mines is only 0.53 per cent. In the past 100 years, there has been a significant decline. This means that near-surface deposits have been mined and few new discoveries have been made to balance the sharp decline in grade. Low-end projects will be the norm, and that won't change any time soon. Production is also slowing as reserves and resources dry up.
The decline in mine taste has driven the demand for alternative extraction technologies. The traditional methods of grinding, milling, baking and leaching, flotation are not only high power consumption, but also high demand for funds. Different types of heap leaching methods will be the preferred method in low-grade copper operation. These technologies are more environmentally friendly and less capital intensive than traditional methods.
BHP Billiton is using chloride technology, while Japanese mining and metals companies are using iodine leaching technology. Both focus on heap leaching, which seems to be an important trend in the future.
Low-end projects, which can be as profitable as high-end projects that use more traditional methods. As we will have more low-grade projects, the technology will become more important.
How important is grade and tonnage in assessing potential deposits?
Ore grade is less than 1%, we say 0.53% as the world average, although less than 1%, you can still make money. We know that the future standard will be less than 0.53%, so it is important to observe the grade and how to extract the metal. The type of deposit or mineralogy attached to the grade, and how to extract metals.
When you control the rating, you should look at other factors that affect the valuation of the project. This is when tonnage starts to work. If the grade is low, it is preferable to have a larger tonnage, as it may involve bulk mining and lower operating costs.
What is the impact of copper prices on retail investment in the industry?
In general, the investment objectives of retail investors in the mining market are short-term. They want something in return in a month, a week or even a day. Copper prices have fallen 14 per cent in the past 12 months. Markets are afraid of a trade war and a potential recession. As a result, base metals prices have fallen and retail investors have stopped investing in base metals exploration companies because they believe prices will fall.
It has an important impact on investment in the industry as the retail market helps to maintain the correct valuation and financing exploration of the company.
How do the strategic investors of large mining companies adapt to the current copper investment pattern?
"Professional Capital" is seriously considering investing in or acquiring advanced copper projects. They do not worry about short-term copper prices, because even if the economy slows down, supply and demand markets will be in short supply by 2021. Copper prices will be boosted, which could raise the valuation of the project. Some participants look to the longer term and want to invest in projects that will go into production. Their investment period is five to ten years. There is a big difference between large companies and the retail market, which sadly will make a comeback when valuations rise sharply.
(translated by SMM)
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