A market overview

The Copper Market

“There is a need of 40 new mines between 2018 and 2028 of a minimum of 10,000,000 tonnes grading 2.5% copper or 10 mines similar in size to the world’s largest copper mine to meet the looming demand beginning in 2018. A copper price increase is predicted as the supply would not be able to meet the demand. Copper prices have remained relatively flat, range -bound between roughly $2.10-2.20/lb, and the mid-September mini-rally back toward $2.20/lb appears to have come on the back of profit-taking on speculative short positions. A recent surge in new Peruvian mine supply — up 50% so far this year on the back of increased domestic mine activity, particularly at the recently opened Las Bambas project — has mostly found its way into China, which holds the bulk of the world’s spare copper refining capacity. Normally, rapidly rising Chinese imports of copper concentrate (up 33% y/y through August, with Peruvian tonnage nearly doubling) would be a bullish signal for the copper market if it wasn’t for the fact that Chinese exports of refined copper are also rising at a break-neck pace (up almost threefold in the May-August period relative to last year), though China remains a net-importer of refined copper.” (Scotia Bank Commodity Price Index; September 30, 2016)

On November 23, the Financial Times published the article entitled “Copper: the commodities slouch that has found top gear - Mood begins to turn on the metal as long-held assumptions are questioned”; excerpts:

“Copper has suddenly burst into life, surging 14 per cent this month to above $5,500 a tonne as investors start to pick apart widely-held assumptions about the underlying dynamic for a metal used in everything from wiring to power grids.The concern over a wall of supply from projects commissioned in the aftermath of the financial crisis is fading just as more optimistic views on demand in China and the US emerge. Even Goldman Sachs — the most consistently negative voice on copper over the past couple of years — has turned more positive, conceding the 23m-tonne-a-year market will be broadly balanced this year. Others are more bullish, forecasting deficits of up to 400,000 tonnes in 2017 if Chinese demand holds up and authorities in Beijing continue to pump credit into the economy ahead of the 19th National Congress of the Communist Party in the autumn. If prices can stay above $5,500 or march higher that will be a huge boost to miners such as Anglo American, Glencore and Freeport-McMoRan, helping them to generate extra cash to pay down debts and eventually restart dividend payments. “The pick-up in Chinese demand has left the market tighter than we previously expected,” Goldman said.

While many have attempted to pin copper’s recent bounce on the still hazy infrastructureplans of US president-elect Donald Trump, sentiment had already started to shift before the shock US election result. One reason is China, where demand has been running at a much faster pace than expected this year thanks to Beijing, which has been trying, with some success, to stimulate the economy with credit. Another is over supply. During the first half of the year there were very few problems at major deposits. That changed abruptly during the third quarter, when several of the world’s biggest copper miners including BHP Billiton and Freeport-McMoRan reported weak results and cut production guidance for 2017. Copper is a difficult commodity to produce, and for that reason, analysts normally price in a 4 to 5 per cent loss of mining output each year due to disruptions...”



An Introduction to Copper

Below are some key points on the copper market, partly derived from The World Copper Factbook 2016 (International Copper Study Group).

1. Copper Basics

Copper is one of the most recycled of all metals. It is our ability to recycle metals over and over again that makes them a material of choice. Recycled copper (also known as secondary copper) cannot be distinguished from primary copper (copper originating from ores), once reprocessed. Recycling copper extends the efficiency of use of the metal, results in energy savings and contributes to ensuring that we have a sustainable source of metal for future generations.

What is Copper?

Copper is a malleable and ductile metallic element that is an excellent conductor of heat and electricity as well as being corrosion resistant and antimicrobial. Copper occurs naturally in the Earth’s crust in a variety of forms. It can be found in sulfide deposits (as chalcopyrite, bornite, chalcocite, covellite), in carbonate deposits (as azurite and malachite), in silicate deposits (as chrysycolla and dioptase) and as pure “native” copper.

Copper also occurs naturally in humans, animals and plants. Organic life forms have evolved in an environment containing copper. As a nutrient and essential element, copper is vital to maintaining health. Life sustaining functions depend on copper.

Copper and copper‐based alloys are used in a variety of applications that are necessary for a reasonable standard of living. Its continued production and use is essential for society’s development.

How society exploits and uses its resources, while ensuring that tomorrow’s needs are not compromised, is an important factor in ensuring society’s sustainable development.

The demand for copper will continue to be met by the discovery of new deposits, technological improvements, efficient design, and by taking advantage of the renewable nature of copper through reuse and recycling.

As well, competition between materials, and supply and demand principles, contribute to ensuring that materials are used efficiently and effectively.

Copper Properties and Benefits

Copper makes vital contributions to sustaining and improving society.

Copper’s chemical, physical and aesthetic properties make it a material of choice in a wide range of domestic, industrial and high technology applications.

Alloyed with other metals, such as zinc (to form brass), aluminum or tin (to form bronzes), or nickel, for example, it can acquire new characteristics for use in highly specialized applications. In fact, society’s infrastructure is based, in part, on copper.

But copper’s benefits extend beyond mechanical characteristics:

• Copper is essential to the health of plants, animal and humans. Deficiencies, as well as excesses, can be detrimental to health.

Antimicrobial Properties. Due to copper’s antimicrobial properties, copper and copper alloys can be used to eliminate pathogens and reduce the spread of diseases.

Recycling. Copper is one of the most recycled of all metals. Virtually all products made from copper can be recycled and and recycled copper loses none of its chemical or physical properties.

Energy Efficiency. Copper can improve the efficiency of energy production and distribution systems.

Copper in History

Archaeological evidence demonstrates that copper was one of the first metals used by humans and was used at least 10,000 years ago for items such as coins and ornaments in western Asia. During the prehistoric Chalcolithic Period (derived from chalkos, the Greek word for copper), man discovered how to extract and use copper to produce ornaments and implements. As early as the 4th to 3rd millennium BC, workers extracted copper from Spain’s Huelva region.

The discovery that copper, when alloyed with tin, produces bronze, led to the Bronze Age, c. 2,500 BC. Israel’s Timna Valley provided copper to the Pharaohs (an Egyptian papyrus records the use of copper to treat infections and to sterilize water). Cyprus supplied much of the Phoenician, Greek and Roman needs for copper. “Copper” is derived from the latin Cyprium, literally Cyprian metal.

The Greeks of Aristotle’s era were familiar with brass as a valued copper alloy. In South America, the pre-Columbian Maya, Aztec and Inca civilizations exploited copper, in addition to gold and silver. During the Middle Ages, copper and bronze works flourished in China, India and Japan.

The discoveries and inventions relating to electricity and magnetism of the late 18th and early 19th centuries by scientists such as Ampere, Faraday and Ohm, and the products manufactured from copper, helped launch the Industrial Revolution and propel copper into a new era.

Copper Today

Today, copper continues to serve society’s needs. Although copper has been in use for at least 10,000 years, innovative applications for copper are still being developed as evidenced by the development of the copper chip by the semi-conductors industry.

The global demand for copper continues to grow: world refined usage has more than tripled in the last 50 years thanks to expanding sectors such as electrical and electronic products, building construction, industrial machinery and equipment, transportation equipment, and consumer and general products. Some of the highlights of 2015 copper production and usage are listed below.

2. Copper Resources and Long‐Term Availability of Copper

Copper Reserves and Resources

Typically, the future availability of minerals is based on the concept of reserves and resources. Reserves are deposits that have been discovered, evaluated and assessed to be economically profitable to mine. Resources are far bigger and include reserves, discovered deposits that are potentially profitable, and undiscovered deposits that are predicted based on preliminary geological surveys. (see definitions below)

According to the United States Geological Survey (USGS), copper reserves currently amount to around 720 million tonnes (Mt) and identified and undiscovered copper resources are estimated to be around 2,100 Mt and 3,500 Mt, respectively. The latter does not take into account the vast amounts of copper found in deep sea nodules and land‐based and submarine massive sulphides. Current and future exploration opportunities will lead to increases in both reserves and known resources.


Resource: A concentration of naturally occurring solid, liquid, or gaseous material in or on the Earth’s crust in such form and amount that economic extraction of a commodity from the concentration is currently or potentially feasible.

Identified Resources: Resources whose location, grade, quality, and quantity are known or estimated from specific geologic evidence. Identified resources include economic, marginally economic, and sub‐economic components.

Undiscovered Resources: Resources, the existence of which are only postulated, comprising deposits that are separate from identified resources. Undiscovered resources may be postulated in deposits of such grade and physical location as to render them economic, marginally economic, or sub‐economic.

Reserves: That part of the reserve base (part of an identified resource that meets specified minimum physical and chemical criteria related to current mining and production practices, including those for grade, quality, thickness, and depth) which could be economically extracted or produced at the time of determination. The term reserves need not signify that extraction facilities are in place and operative

2015 World Copper Reserves & Mine Production (undiscovered resources not including deep sea nodules and land‐based and submarine massive sulfides ‐ contained copper)

Total Resources (identified and undiscovered):
5,600 million tonnes (Mt)
• Identified Resources 2,100 Mt
• Reserves 720 Mt
• Mine Capacity 22 Mt
• Mine Production 19 Mt

Global Distribution of Identified and Undiscovered Copper Resources in Porphyry and Sediment‐hosted Stratabound Copper Deposits

In 2013 the U.S. Geological Survey (USGS) completed a geology‐based, cooperative international in two deposit types that account for about 80% of the world’s copper supply. Porphyry copper deposits account for about 60% of the world’s copper. In porphyry copper deposits, copper ore minerals are disseminated in igneous intrusions. Sediment‐hosted stratabound copper deposits, in which copper is concentrated in layers in sedimentary rocks, account for about 20% of the world’s identified copper. The mean undiscovered totals for porphyry and sediment‐hosted deposits are 3,100 and 400 Mt respectively, resulting in a global total of 3,500 Mt of copper. With identified copper resources currently estimated at 2,100 Mt, total copper resources (undiscovered + identified) are estimated at 5,600 Mt.

Despite increased demand for copper produced from ore in recent years, increases in reserves have grown, and there is more identified copper available to the world than at any other time in history.

Are We Going to Run Out of Copper?

It is highly improbable. Since 1950, based on the then current rate of demand, there has always been, on average, 40 years of reserves, and significantly greater amounts of known resources (USGS data). In addition, recycling, innovation and mining exploration continue to contribute to the long‐term availability of copper.

In the period 2005‐2015, 182 million tonnes of copper have been mined. In that same period however, reserves have grown by 250 million tonnes. This reflects additional exploration, technological advances and the evolving economics of mining.

Technology has a key role to play in addressing many of the challenges faced by new copper production. Known and as yet unknown innovations will ensure new mine production continues to provide vital copper supplies.

In addition copper recycling plays an important role in copper availability since today’s primary copper is tomorrow’s recycled material.
Unlike other commodities such as energy or food, copper is not “consumed”. Copper is one of the few raw materials which can be recycled repeatedly without any loss of performance, and key stakeholders such as policy‐makers, scrap collectors, copper producers and recyclers must all focus on ensuring that yesterday’s metal is recycled and re‐used.

While this will ensure a progressive move towards a more sustainable economy, the loop cannot be completely closed for two reasons. Firstly, demand will continue to increase due to population growth, product innovation and economic development. Secondly in most applications, copper stays in use for decades.

Consequently, meeting future metals demand will continue to require a combination of primary raw materials, coming from mines, as well as recycled materials, while innovative policies and technology should continue to contribute to improvements in recycling performance and resource efficiency.

Based on the latest knowledge on geological availability and continuous industry innovation there are good reasons to believe that copper will continue to be a vital and positive contributor to society well into the future.

3. Copper Production

How is Copper Produced?

Geologists look for signs and/or anomalies that would indicate the presence of a mineral deposit. Under the right geological, economic, environmental and legal conditions, mining can proceed.

Primary copper production starts with the extraction of copper‐bearing ores. There are three basic ways of copper mining: surface, underground mining and leaching. Open‐pit mining is the predominant mining method in the world. After the ore has been mined, it is crushed and ground followed by a concentration by flotation. The obtained copper concentrates typically contain around 30% of copper, but grades can range from 20 to 40 per cent. In the following smelting process, sometimes preceded by a roasting step, copper is transformed into a “matte” containing 50‐70% copper. The molten matte is processed in a converter resulting in a so‐called blister copper of 98.5‐99.5% copper content.

In the next step, the blister copper is fire refined in the traditional process route, or, increasingly, re‐melted and cast into anodes for electro‐refining.
The output of electro‐refining is refined copper cathodes, assaying over 99.99% of copper.

Alternatively, in the hydrometallurgical route, copper is extracted from mainly low grade oxide ores and also some sulphide ores, through leaching (solvent extraction) and electrowinning (SX‐EW process). The output is the same as through the electro‐refining route ‐ refined copper cathodes. ICSG estimates that in 2015, refined copper production from SX‐EW represented 17% of total copper refined production.

Refined copper production derived from mine production (either from metallurgical treatment of concentrates or SX‐EW) is referred to as “primary copper production”, as obtainable from a primary raw material source. However, there is another important source of raw material which is scrap. Copper scrap derives from either metals discarded in semis fabrication or finished product manufacturing processes (“new scrap”) or obsolete end‐of‐life products (“old scrap”). Refined copper production attributable to recycled scrap feed is classified as “secondary copper production”. Secondary producers use processes similar to those employed for primary production. ICSG estimates that in 2015, at the refinery level, secondary copper refined production reached 17% of total copper refined production.

Since 1900, when world production was less than 500 thousand tonnes copper, world copper mine production has grown by 3.2% per annum to 19.1 million tonnes in 2015. SX‐EW production, virtually non‐existent before the 1960s, exceeded 3.9 million tonnes in 2015.


Constraints on Copper supply

With copper concentrate in strong demand, there has been growing interest in understanding the obstacles that can prevent copper mine supply from coming on stream.

Declining ore grades: a serious issue in developed copper areas such as the USA and Chile

Project finance: prolonged economic and price volatility may have significant impact on cost of capital

Tax & investment regimes: recent research indicates these are less important than geological endowments

Other cost issues: lower capital expenditure may have adverse long term effect on copper supply; operating cost escalation
• Water supply: a critical issue in dry mining districts

Energy: coal is the fuel chosen to power main copper mines and processes... climate change may increase costs

Other environmental issues: governments are becoming more aware of the impact of mining to the surrounding environment in recent years. In countries like Peru and the Philippines, the relationship with indigenous community is also a key factor.

Resource nationalism: It has become a priority for certain governments to develop their mineral resources that have not been exploited until now. While willing to develop their natural resources, countries might be seeking to extract strong revenue flows from them. It will be important to balance royalty/taxation levels with the need to encourage capital investment to develop their rising industries.

Sulphuric acid supply and price: 16% cost factor for SX‐EW projects

Skilled labor: open labor markets would help address this constraint

Labor strikes: tend to increase when refined prices are high and GDP is growing faster, but tend to be longer and less frequent otherwise

High domestic costs if there is “Dutch disease” (resulting in higher exchange rates due in part to strong exports)

Rate between imported inputs and domestic input costs affected by the currency strength of the producer

Political risks: Security and transport accessibility is crucial to mine operation

4. Copper Trade

Copper products across the value chain are traded internationally.

Often, countries where upstream copper production capacity exceeds downstream production capacity will import the raw materials needed to meet their production needs, and vice versa.

Major product categories of copper traded internationally include:

• Copper concentrates
• Copper blister and anode
• Copper cathode and ingots
• Copper scrap and
• Copper semis

Copper powders and compounds are also traded globally, but typically in much smaller quantities. In additional, copper is contained in end‐use products that are traded globally including automobiles, appliances, electronic equipment and other products. Changes in trade regulations, such as import duties or export quotas, can have significant impacts on the international trade of copper.

The global Copper market and the “commodity“ Copper

Copper, as any other good or merchandise, is traded between producers and consumers. Producers sell their present or future production to clients, who transform the metal into shapes or alloys, so that downstream fabricators can transform these into different end‐use products. One of the most important factors in trading a commodity such as copper is the settlement price for the present day (spot price) or for future days.


The role of a commodity exchange is to facilitate and make transparent the process of settling prices. Three commodity exchanges provide the facilities to trade copper: The London Metal Exchange (LME), the Commodity Exchange Division of the New York Mercantile Exchange (COMEX/NYMEX) and the Shanghai Futures Exchange (SHFE). In these exchanges, prices are settled by bid and offer, reflecting the market’s perception of supply and demand of a commodity on a particular day.

On the LME, copper is traded in 25 tonne lots and quoted in US dollars per tonne; on COMEX, copper is traded in lots of 25,000 pounds and quoted in US cents per pound; and on the SHFE, copper is traded in lots of 5 tonnes and quoted in Renminbi per tonne. More recently, mini contracts of smaller lots sizes have been introduced at the exchanges.

Exchanges also provide for the trading of futures and options contracts. These allow producers and consumers to fix a price in the future, thus providing a hedge against price variations. In this process the participation of speculators, who are ready to buy the risk of price variation in exchange for monetary reward, gives liquidity to the market.

A futures or options contract defines the quality of the product, the size of the lot, delivery dates, delivery warehouses and other aspects related to the trading process. Contracts are unique for each exchange. The existence of futures contracts also allows producers and their clients to agree on different price settling schemes to accommodate different interests.

Exchanges also provide for warehousing facilities that enable market participants to make or take physical delivery of copper in accordance with each exchange’s criteria.

5. Copper Usage

How Is Copper Used?

Copper is shipped to fabricators mainly as cathode, wire rod, billet, cake (slab) or ingot. Through extrusion, drawing, rolling, forging, melting, electrolysis or atomization, fabricators form wire, rod, tube, sheet, plate, strip, castings, powder and other shapes. The fabricators of these shapes are called the first users of copper. The total use of copper includes copper scrap that is directly melted by the first users of copper to produce copper semis.

Copper and copper alloy semis can be further transformed by downstream industries for use in end use products such as automobiles, appliances, electronics, and a whole range of other copper‐dependent products in order to meet society’s needs. This section provides a range of information about refined copper usage, total use, major uses of copper and end‐use.

Major Uses of Copper

Copper is the best non‐precious metal conductor of electricity as it encounters much less resistance compared with other commonly used metals. It sets the standard to which other conductors are compared.

Copper is also used in power cables, either insulated or uninsulated, for high, medium and low voltage applications.
In addition, copper’s exceptional strength, ductility and resistance to creeping and corrosion makes it the preferred and safest conductor for commercial and residential building wiring.

Copper is an essential component of energy efficient generators, motors, transformers and renewable energy production systems. Renewable energy sources such as solar, wind, geothermal, fuel cells and other technologies are all heavily reliant on copper due to its excellent conductivity.

Electronics and Communications
Copper plays a key role in worldwide information and communications technologies. HDSL (High Digital Subscriber Line) and ADSL (Asymmetrical Digital Subscriber Line) technology allows for high‐speed data transmission, including internet service, through the existing copper infrastructure of ordinary telephone wire.

Copper and copper alloy products are used in domestic subscriber lines, wide and local area networks, mobile phones and personal computers. Semiconductor manufacturers have launched a revolutionary “copper chip.”

By using copper for circuitry in silicon chips, microprocessors are able to operate at higher speeds, using less energy. Copper heat sinks help remove heat from transistors and keep computer processors operating at peak efficiency. Copper is also used extensively in other electronic equipment in the form of wires, transformers, connectors and switches.

Copper and brass are materials of choice for plumbing, tabs, valves and fittings. Thanks in part to its aesthetic appeal, copper and its alloys, such as architectural bronze, is used in a variety of settings to build facades, canopies, doors and window frames.

Unlike plastic tubing, copper does not burn, melt or release noxious or toxic fumes in the event of a fire. Copper tubes also help protect water systems from potentially lethal bacteria such as legionella. Copper fire sprinkler systems are a valuable safety feature in buildings. The use of copper for doorknobs and plates exploits copper’s biostatics properties to help prevent the transfer of disease and microbes.

Copper roofing, in addition to being attractive, is well known for its resistance to extreme weather conditions. Major public buildings, commercial buildings and homes use copper for their rainwater goods and roofing needs. The telltale green patina finish, that gives copper the classic look of warmth and richness, is the result of natural weathering.

All major forms of transportation depend on copper to perform critical functions.

Copper‐nickel alloys are used on the hulls of boats and ships to reduce marine biofouling, thereby reducing drag and improving fuel consumption. Automobiles and trucks rely on copper motors, wiring, radiators, connectors, brakes and bearings. Today, the average mid‐size automobile contains about 22.5 kg (50 lbs) of copper, while luxury cars on average contain around 1,500 copper wires totaling about 1.6 km (1 mile) in length.

Electric and hybrid vehicles can contain even higher levels of copper. Copper’s superior thermal conductivity, strength, corrosion resistance and recyclability make it ideal for automotive and truck radiators. New manufacturing technologies, processes and innovative designs are resulting in lighter, smaller and more efficient radiators.

Copper is also used extensively in new generation airplanes and trains. New high‐speed trains can use anywhere from 2 to 4 tonnes of copper, significantly higher than the 1 to 2 tonnes used in traditional electric trains.

Industrial Machinery and Equipment
Wherever industrial machinery and equipment is found, it is a safe bet that copper and its alloys are present.

Due to their durability, machinability and ability to be cast with high precision and tolerances, copper alloys are ideal for making products such as gears, bearings and turbine blades.

Copper’s superior heat transfer capabilities and ability to withstand extreme environments makes it an ideal choice for heat exchange equipment, pressure vessels and vats.

The corrosion resistant properties of copper and copper alloys (such as brass, bronze, and copper‐nickel) make them especially suitable for use in marine and other demanding environments.

Vessels, tanks, and piping exposed to seawater, propellers, oil platforms and coastal power stations, all depend on copper’s corrosion resistance for protection

Consumer and General Products
From the beginning of civilization copper has been used by various societies to make coins for currency. Today, countries are replacing lower denomination bills with copper‐based coins, as these coins last 10, 20 and even 50 times longer.

In the United States, one cent coins and five cent coins contain 2.5% and 75% copper, respectively, while other U.S. coins contain a pure copper core and 75% copper face.

In the recently expanded European Union, the Euro coins, first introduced in 2002, also contain copper.

Copper and copper‐based products are used in offices, households and workplaces. Computers, electrical appliances, cookware, brassware, and locks and keys are just some of the products exploiting copper’s advantages. In addition, in areas known to be copper deficient, copper is used by farmers to supplement livestock and crop feed.

6. Copper Recycling

Copper is among the few materials that do not degrade or lose their chemical or physical properties in the recycling process. Considering this, the existing copper reservoir in use can well be considered a legitimate part of world copper reserves.

In the recent decades, an increasing emphasis has been placed on the sustainability of material uses in which the concept of reuse and recycling of metals plays an important role in the material choice and acceptance of products.

If appropriately managed, recycling has the potential to extend the use of resources, and to minimize energy use, some emissions, and waste disposal.
Closing metal loops through increased reuse and recycling enhances the overall resource productivity and therefore represents one of the key elements of society’s transition towards more sustainable production and consumption patterns. It is widely recognized that recycling is not in opposition to primary metal production, but is a necessary and beneficial complement.

In 2014, ICSG estimates that around 30% of copper usage came from recycled copper. Some countries’ copper requirements greatly depend on recycled copper to meet internal demands. However, recycled copper alone cannot meet society’s needs, so we also rely on copper produced from the processing of mineral ores.




King of Manitoba‘s Unmined High-Grade Copper and Zinc Deposits

Report #1

Drill core from the gold-rich Talbot Copper-Zinc Deposit, where the ongoing phase-2 drill program has recently been increased due to results exceeding expectations.

With a current market capitalization of $14 million CAD, a well-funded treasury of $3 million CAD and no debt, Rockstone initiates coverage of Rockcliff Copper Corporation. The Toronto-based company is focused on the discovery, advancement and consolidation of the highest grade unmined deposits within the prolific Flin Flon-Snow Lake Greenstone Belt in mining-friendly Manitoba. This is Canada’s most productive greenstone belt, hosting over 30 mines and 90 deposits over the last century.

Read the full report here as a PDF. (web version)

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