Copper Supercycle: Protectionist Moves and High Demand Create Perfect Storm

Rhea-AI Summary

Prices for copper are surging due to supply cuts and increased demand from energy transition and AI projects, potentially marking a new supercycle. Analysts from Sprott and Trafigura highlight the supply-demand imbalance, predicting a deficit of 4-5 million tons by 2030. Yukon Metals Corp. (CSE: YMC) has doubled its land holdings to 36,000 hectares and is focusing on high-priority properties like AZ and Talbot. Freeport-McMoRan (NYSE: FCX) aims to boost copper output by 800 million pounds annually using new technology. Taseko Mines (NYSE-American: TGB) faces operational setbacks due to strikes, while Teck Resources (NYSE: TECK) saw a 74% rise in production. Ero Copper Corp. (NYSE: ERO) nears operational completion of its Tucumã Project in Brazil.

Positive

• Copper prices are experiencing record highs, signaling strong market demand.
• Yukon Metals has expanded its land holdings from 18,000 to 36,000 hectares.
• Freeport-McMoRan aims to increase copper output by 800 million pounds annually using new technology.
• Teck Resources saw a 74% increase in copper production in Q1 2024.
• Ero Copper Corp. received the final permitting milestone for its Tucumã Project.

Negative

• Taseko Mines had to suspend operations at its Gibraltar Mine due to a strike.
• The global supply-demand deficit for copper is expected to increase to 4-5 million tons by 2030.
• Despite encouraging sample results, there has been no further exploration or development in some Yukon Metals properties since 1989.

Insights

Market Research Analyst

The article highlights the potential onset of a copper supercycle, driven by protectionist policies and heightened demand from energy transition and AI projects. This is particularly significant given that copper is a critical metal for both renewable energy and technological advancements. The trajectory points towards a substantial supply-demand deficit, projected to reach 4-5 million tons by 2030. For retail investors, recognizing this supply crunch provides insight into the broader market dynamics and the possible long-term appreciation in copper prices.

Yukon Metals Corp., a relatively new entrant, has aggressively expanded its land holdings and seems well-positioned to capitalize on this supercycle. The company's focus on high-priority assets like the AZ and Talbot properties, coupled with promising historical sample results, indicates a robust potential for future production. However, investors should also be cautious of the inherent risks in junior mining investments, including the long lead times and high costs associated with exploration and development.

Financial Analyst

From a financial perspective, the copper industry's current state presents both opportunities and challenges for investors. Companies like Freeport-McMoRan Inc. and Teck Resources Limited are leveraging technological advancements and strategic acquisitions to boost production. Freeport's innovative processing technology aims to significantly increase its output by 800 million pounds annually, effectively creating the equivalent of a large new mine. This highlights a trend where established miners are focusing on efficiency and maximizing existing assets, which is less risky and more cost-effective compared to starting new projects.

Meanwhile, Teck Resources' substantial increase in production and recognition for responsible practices through the Copper Mark award enhances its market position and appeal to ESG-focused investors. For retail investors, these developments suggest that established companies with strong operational efficiencies and strategic foresight may offer more stable investment opportunities compared to newer, less proven entities.

Resource Industry Expert

The article underscores the significant operational milestones achieved by various companies within the copper mining sector. Notable is Ero Copper Corp.'s nearing completion of the Tucumã Project in Brazil, which is set to commence commercial operations soon. This project, with a steady capital cost estimate of around $310 million, signals the company's readiness to meet growing copper demand. The strategic moves by Yukon Metals Corp. and the technological advancements by Freeport-McMoRan highlight the industry's adaptive strategies to meet future supply needs.

However, the suspension of operations at Taseko Mines Limited's Gibraltar Mine due to a union strike represents a critical challenge, emphasizing the vulnerabilities companies face beyond just market conditions. For investors, understanding these operational risks is essential. The sector's landscape is marked by both potential high rewards and considerable risks, especially for companies navigating supply chain complexities, regulatory requirements and workforce stability.

USA News Group Commentary

Issued on behalf of Yukon Metals Corp.

VANCOUVER, BC, June 14, 2024 /PRNewswire/ -- With prices soaring for copper amid supply cuts and higher demand from energy transition and artificial intelligence (AI) projects, many industry experts are asking whether or not the red metal is entering a new supercycle of prolonged high demand and rising prices. According to analysts at Sprott, copper's new supercycle is already emerging, as protectionist moves by countries looking to secure vital materials are only stoking the flame. Long viewed as a barometer for economic activity, the market witnessed record highs in copper prices last month, signalling the urgency of developing new supplies. With experts stating the current copper supply forecast is insufficient for the global EV transition by 2035, the rise of AI infrastructure needs only serves to amplify the shortage. When opening a single copper mine can take 23 years, moves made by miners today are incredibly important, with recent developments coming from Yukon Metals Corp. (CSE: YMC), Freeport-McMoRan Inc. (NYSE: FCX), Taseko Mines Limited (NYSE-American: TGB) (TSX: TKO), Teck Resources Limited (NYSE: TECK) (TSX: TECK-B), and Ero Copper Corp. (NYSE: ERO).

According to analysts at Trafigura, AI development will increase copper demand by 1 million tons per annum by the end of 2030, with the demand-supply deficit set to increase to 4-5 million tons in that same time. With the supply crunch only set to get worse, a new entrant in the race has emerged with Yukon Metals Corp. (CSE: YMC), a newly branded miner that recently acquired an impressive premium-quality portfolio in the Yukon built upon over 30 years of prospecting by the Berdahl family, the same team that built up Snowline Gold which currently trades with a market cap of over US$655M.

Wasting no time after the initial acquisition, Yukon Metals swiftly announced that it has already doubled its land holdings from an initial 18,000 hectares to 36,000 hectares. This expansion includes significant staking at the priority AZ property, areas surrounding the Talbot property, and new claims near the Alaska Highway, known as "Fairway."

"During these past months, prior to Closing of the acquisition, the Company has been busy staking ground around two key properties, AZ and Talbot, as well as staking new claims at Fairway," said Rory Quinn, President and CEO of Yukon Metals. "AZ is a high-priority potential copper-gold porphyry asset, while Talbot hosts a substantial gold and silver anomaly. Both AZ and Fairway are within 20km of the Alaska Highway. I look forward to sharing ongoing details of what is going to be a busy exploration season."

In the early 1990s, while working for Noranda, Ron Berdahl explored the AZ and Fairway claim area and found copper mineralization on the AZ property. In 1993, rock sample tests indicated an average of 10% copper, 126 grams per tonne of silver, and 7.08 grams per tonne of gold. A report mentioned in a previous YMC press release on June 3, 2024, suggested that these mineralized rocks likely originated from a local source on the property. Additionally, small gold mining operations were present in the 1930s on Sanpete, Pan, and Gold Creeks in this region.

Ron Berdahl staked an additional 7,625 hectares on behalf of Yukon Metals to the north of the southern AZ claims, adding 372 new claims. This area includes significant mineral findings, such as gold, silver, copper, lead, and zinc. Despite encouraging initial sample results, there has been no further exploration or development in this area since 1989.

"Completing the acquisition of these high-quality exploration assets in the Yukon marks an exciting beginning for Yukon Metals," said Rory Quinn, President and CEO of Yukon Metals. "We have tremendously exciting properties that we'll work to responsibly and systematically advance, from copper-gold and silver-lead-zinc, to precious metals focused assets. With a healthy treasury after raising in excess of C$15 million, a comprehensive exploration database and key permits already in place, we are ready to hit the ground running!"

While finding new deposits is integral, other miners are looking for innovative ways to expand their copper assets that they already have.

According to its new CEO Kathleen Quirk, Freeport-McMoRan Inc. (NYSE: FCX) believes it can unlock the equivalent of a large new copper mine, just by applying new processing technology at its existing assets. Freeport is targeting an annual production of up to 800 million pounds of copper, which is approximately 20% of its current total output. This increase will come from new technology that enables the company to extract metal it already owns but couldn't previously access.

"I'm really focused on this issue, because when we look around, we know how hard it is to develop new supply," said Quirk when referring to the company's copper leaching program in an interview in New York. "You think about 800-million pounds of copper a year — that's the size of a big mine. That's meaningful. Our team is working very aggressively to get that done."

Freeport is already currently extracting an additional 200 million pounds of copper through the recovery process and aims to add another 200 million pounds over the next two years. Within the next three to five years, the company plans to develop the technology to extract 800 million pounds annually.

As supply issues are arising around the world, it doesn't help that Taseko Mines Limited (NYSE-American: TGB) (TSX: TKO) recently had to suspend operations at its Gibraltar Mine, due to a strike by its unionized workforce. The timing of the stoppage was unfortunate for Taseko, which had only recently acquired the remaining 12.5% interest in the mine from Dowa Metals & Mining, and Furakawa at the end of March, making it the 100% owner.

"We are happy to once again own 100% of the Gibraltar mine, our foundational asset, which will continue to generate strong returns for the Company for many years to come," said Stuart McDonald, President & CEO of Taseko at the time of the 100% equity stake achievement. "This acquisition provides 14% growth in our attributable copper production, and is immediately cashflow accretive as we advance construction at our Florence Copper Project."

In the first three months of this year, Teck Resources Limited (NYSE: TECK) (TSX: TECK-B) saw its copper production rise by 74%, bolstered by the ramp up of the extension at its Quebrada Blanca (QB) mine in Chile. As QB's production continued its ramp up, Teck saw its copper production hit 99,000 tonnes in Q1 2024, with 43,300 tonnes coming from QB alone.

Late last year, The Globe & Mail reported that Teck's divesting of its coal mines in British Columbia to Glencore would leave Canada's largest mining company with plenty of cash to potentially slowly triple its copper production. The expansion of QB has been seen as a success, with Teck receiving the Copper Mark award in recognition of environmentally and socially responsible production practices at both QB and its Carmen de Andacollo (CdA) operations.

"Copper is an essential metal for the transition to a low-carbon economy and our new Quebrada Blanca operation, as well as our Carmen de Andacollo operation, are contributing to helping sustainably meet growing demand," said Jonathan Price, President and CEO of Teck. "Being awarded the Copper Mark demonstrates our operations' commitment to responsible copper production, both for our customers and for the environment and people where we operate."

In Brazil, Ero Copper Corp. (NYSE: ERO) (TSX: ERO) recently received the last remaining permitting milestone for commercial operation on its Tucumã Project. With physical completion nearing 99%, commissioning well underway, and over 90% of the operational staff hired and trained, Ero still anticipates first concentrate early in the third quarter of 2024. The total direct capital cost estimate for the project's completion remains steady at around $310 million.

"I am thrilled to announce that we have received our operational license from SEMAS - the last regulatory approval required for commercial operations to commence at Tucumã," said David Strang, CEO of Ero Copper. "The Company is rapidly approaching a major inflection point, which we believe will benefit all of our stakeholders for years to come."

CONTACT:

USA NEWS GROUP
info@usanewsgroup.com
(604) 265-2873

Amerigo Resources Ltd. (TSX: ARG) (OTCQX: ARREF)

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SOURCE USA News Group

FAQ

What is causing the surge in copper prices in 2024?

Copper prices are surging due to supply cuts and increased demand from energy transition and AI projects.

What is Freeport-McMoRan's (NYSE: FCX) target for increasing copper output?

Freeport-McMoRan aims to increase copper output by 800 million pounds annually using new technology.

What significant expansion has Yukon Metals Corp. (CSE: YMC) recently undertaken?

Yukon Metals Corp. has doubled its land holdings from 18,000 to 36,000 hectares, including strategic properties like AZ and Talbot.

What challenges is Taseko Mines (NYSE-American: TGB) currently facing?

Taseko Mines had to suspend operations at its Gibraltar Mine due to a strike by its unionized workforce.

What recent milestone has Ero Copper Corp. (NYSE: ERO) achieved for its Tucumã Project?

Ero Copper Corp. received the final permitting milestone and is nearing operational completion of its Tucumã Project.

How has Teck Resources' (NYSE: TECK) copper production changed recently?

Teck Resources saw a 74% increase in its copper production in Q1 2024.