Why dependence on solely one source for copper output is concerning

The First Quantum Minerals Cobre mine in Donoso, Colon province, Panama. Copper, a key metal for basic urban development, is needed in vast quantities but increasingly hard to find. Bloomberg

Never mind the latest hot topic of strategic minerals, the rare earths sought in Greenland and Ukraine. Which metal forged the earliest civilisations and also builds the future, makes ancient daggers and modern ammunition, is needed in vast quantities but increasingly hard to find? The answer is copper, mined in the Gulf in antiquity – and for which, the Gulf again could have a key role.

Copper has the second-highest electrical conductivity of any metal, after only much costlier silver. It is ductile, so can be drawn easily into wires. These characteristics make it a key metal for basic urban development, of wiring, piping and air-conditioning.

It is crucial in emerging energy technologies: a traditional petrol or diesel car contains 20kg of the metal, but an electric car needs 60 to 80kg. Solar photovoltaic panels, solar thermal plants, wind turbines, and the cabling to get their electricity to users, all require large amounts of copper.

The data centres that drive artificial intelligence are also voracious consumers of the metal: Australian miner BHP suggests they will require 3 million tonnes a year, more than 10 per cent of current global consumption, by midcentury. That does not include the extra copper required for their electrical demands.

And as it was for the bronze alloy of the ancient Greeks’ helmets and spear-points, copper is a core component of modern warfare, required for bullets and artillery shells. As American-Canadian mining billionaire Robert Friedland commented last year: “What do you think the world’s army is made out of?”

Even while its real estate sector has stumbled, China’s burgeoning new energy industries continue to soak up copper. From about 12 per cent of world demand in 2000, the Middle Kingdom now uses 57 per cent of global output. China is not as dominant in copper processing as for some materials, but it still holds 43 per cent of global capacity.

The key mines in Chile and Peru are ageing, with ever-lower grades and often beset by community protests. Africa is the key new source, as output in the Democratic Republic of Congo (DRC)’s famous copper-belt expands. But mines here are often controlled by Chinese interests.

Such dependence on one source for a critical raw material inevitably provokes concerns. Copper has been mined and used in vast quantities for millennia, so major new high-quality deposits are not easy to find. Bringing a new mine into production takes at least a decade and often longer. Mines and smelters are increasingly carbon-intensive, and it is difficult in many mining locales to obtain sufficient water or to dispose of wastewater responsibly.

From refined copper demand of 26 million tonnes last year, a supply deficit of up to 9.9 million tonnes annually is expected to strike in the 2025-2035 period. Mr Friedland has said that a copper price of $15,000 per tonne is required to encourage sufficient investment in new mines, while prices today are about $10,000. Recycling provides another 6 million tonnes a year, while aluminium can substitute some copper uses. But the performance of aluminium is not as good, so it will only be used when copper prices are high.

"Given the importance of copper and the inevitable shortage, this metal will become a major factor in geopolitics for the next decade," says mining entrepreneur Michael Eggleton. He sees a solution coming in three parts.

The first is the development of new mines, especially those with proved, shovel-ready resources.

Based in Dubai, his company is working on major new copper developments in southern Africa – Namibia, the Republic of Congo and the DRC – having previously reactivated a mine in Utah.

We see such trends too in the Gulf, where long-known deposits in northern Oman, site of the ancient copper-trading Magan civilisation, are being brought back to production. Meanwhile, Saudi Arabia is conducting an ambitious minerals exploration programme for copper, gold and other resources in its west.

The second part is AI – showing it as a problem-solver, not just a consumer of resources. KoBold Metals, a venture backed by Bill Gates and Jeff Bezos, has used AI to make what it says is the biggest copper find in Zambia in a century. But Mr Eggleton believes AI will be more useful in optimising mine developments and operations, accelerating output, reducing environmental damage, and filling the gap of skilled people.

The third component is strategic intent from key governments. This includes aiding finance and insurance for new mines, and creating supporting infrastructure. The US- and EU-backed Lobito Corridor, for instance, would build a rail link from the southern DRC and Zambia, through Angola to a seaport. This would greatly save on time and costs for bringing out minerals, while fostering wider economic development in this landlocked area by fostering trade and communications.

The UAE is already an active investor in African copper, through Abu Dhabi-based International Resources Holding’s purchase in December 2023 of a 51 per cent stake in the Mopani mines in Zambia, for $1.1 billion. Saudi Arabia’s state Manara Minerals is also interested in Zambian copper assets. Gulf companies have invested widely in ports across the continent, making them a natural fit for projects such as Lobito.

Governments also need to assist companies in managing the often-tricky politics of mineral-rich countries. The US, EU and Gulf all have their own particular approaches and relationships with the various copper-belt states.

The Gulf could also have an important role in copper smelting and refining. Its low energy costs, ample supply of low-carbon electricity, excellent logistics, and business-friendly systems, would make it a good place to process the metal. Growing ambitions to manufacture clean energy systems also require reliable, cost-effective inputs.

Inevitably, the US and European governments see a competitive logic to their state-backed support. But from a Gulf point of view, this is not about opposition to China, but simply having a healthy diversity of suppliers for this critical metal. About 7,000 years since the first Copper Age began, the new energy and AI era is also the second Copper Age.