Ground Breakers: Mining titan Bill Beament says a ‘tsunami’ of interest is coming for copper and zinc miners
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Aussie mining titan Bill Beament says a “tsunami is coming” and markets focused on the short term are oblivious to the massive wave of demand coming for critical minerals like copper and zinc.
Both commodities are down this year so far along with other industrial base metals amid recessionary fears, interest rate hikes and lower than expected Chinese demand.
But he says copper is a “2024-25 story” with a number of new smelters coming online in China and the West and growing warnings that supply is unlikely to keep pace with demand.
It lays the foundation for his miner and mining services provider to get to work on the development of its Woodlawn zinc and copper mine in New South Wales and the Sulphur Springs asset in WA’s north, the subject of a bullish feasibility study today.
A revised DFS vastly different from a 2018 edition, now focused entirely on underground mining, would see the project deliver over 80,000t of zinc and 16,000t of copper over its first four years after a $296 million construction program based off a reserve of 8.8Mt at 1.05% copper and 5.6% zinc, accounting for 91% of the tonnes in the mine plan.
Currently US$8255/t and US$2350/t respectively, demand for copper and zinc are likely to surge from the rollout of EVs and renewables during the energy transition.
“Analysts are quarter by quarter, they never look out beyond that, the market looks out beyond a certain time but when you’ve got more pressing issues like cost of living, inflation and recession, markets aren’t really interested in copper or zinc or whatever,” Beament said.
“But we all know what’s coming.
“I’ve said this from day one, two years ago when I recapped… the copper and zinc story was more of a ’25 onwards story.
“If you look at all the supply and demand, you look at the commitments people have done on net zero and when they kick in, you look at all the new models and the new production lines of EVs and when they kick in, and the charging stations and the take up of all that, it was always a ’25 story onwards.”
The shift to copper has been seen across the spectrum of the global majors. With prices down over one-fifth from the record highs of US$10,700/t seen in May 2021, companies like BHP (ASX:BHP) and Rio Tinto (ASX:RIO) are splashing the cash to acquire new copper mines and expand existing assets.
Overseas, Teck’s portfolio of copper mines have drawn interest from Glencore. Both are trying to divorce their “clean metals” like copper and nickel from their coking and thermal coal interests.
“Ask the majors, I won’t name him but I had a global head of copper from one of the biggest offtakers in the world in my office three weeks ago,” Beament said.
“Super bullish on copper and zinc, which I was pleased to hear, but his view was it’s not ’til a late ’24-25 story.
“The other thing that’s really interesting that he mentioned is they’ve got a lot of smelters and refining capacity … they said there’s three big copper smelters coming online next calendar year.
“So where are they going to get their con from? Seaborne copper con is going to be highly sought (after) end of the next year and TCRCs (treatment and refining charges) are going to come down because of the competition for product.”
Sulphur Springs is likely the second mine Develop will sink its teeth into, given the Woodlawn mine acquired from the administrators of Heron Resources already has a processing plant and hundreds of millions in existing infrastructure including a processing facility.
But Beament says there is strong demand for offtake from Sulphur Springs as well, with only 135,000t of zinc committed to Japan’s Toho Zinc from the fifth year of production on at benchmark prices.
By forgoing the open pit that was previously part of the Sulphur Springs mine plan under old management, Beament says the company will deliver a cleaner concentrate with fewer deleterious elements expected to draw penalties worth around $2m a year from smelters.
The rejigged project will also generate less mine waste, delivering a greener product en route to generating $2.9 billion in revenue and $745m in free cash flow over its eight-year mine life.
Along with the drive to develop critical minerals, Beament says the company’s other industry — underground mining — is poised to boom.
The company is around a year into a gig as the underground mining contractor at the Bellevue Gold Mine in WA’s Northern Goldfields, and is a likely bidder for the contract on the Kathleen Valley mine nearby, the world’s first underground lithium operation.
Northern Star Resources (ASX:NST), which Beament previously built from a penny stock into Australia’s second largest gold miner, is eyeing a major underground development beneath Kalgoorlie’s iconic Super Pit.
Beament claims he’s been inundated with inquiries from companies looking to start underground operations.
“If you’re a mine owner and you’ve got underground projects to develop — and it’s not just Australia, take some of the stuff offshore that want Australian expertise — you’re really going to have to work with the underground mining services industry to be able to achieve it,” he said.
“There is no talent out there, there’s no equipment unless you’ve got relationships in both, you’re in a world of pain moving forward.
“The amount of activity coming online in underground is extraordinary and there’s stuff I didn’t even think of that just came out of left field last week.”
Develop shares fell 4.7% this morning to $3.23, grinding against a broader 0.46% gain for the ASX materials sector.
But Beament says the company, which has risen 260% to a ~$600m market cap over the past five years, is in a good place to source finance for its future mine builds.
“It’s fair to say the level of interest behind closed doors is very high, because people know that they’re going to need to secure these commodities in the future,” he said.