It is well known the electric vehicle (EV) revolution is going to drive the need for more copper, but what is not as well known is the fact that people’s desire for more smart devices in the home is also expected to contribute significantly to demand growth.

Copper is found in smart home hubs, switches, routers, wiring and lithium-ion batteries.

New research, commissioned by the International Copper Association (ICA), shows copper use in smart home applications is likely to reach 1.5 million tonnes per annum by 2030.

The findings indicate that as soon as 2021, copper demand could more than double across the smart home market as increased usage becomes more prominent.

UK-based consultancy BSRIA, the company that conducted the study, predicts that 1.6 billion systems will be installed by 2030 – rising from 177.2 million in 2018.

“BSRIA’s forecast from 2018 to 2030 shows global market growth for smart home systems will increase to 21 per cent CAGR,” says Anette Meyer Holley, business manager for Worldwide Market Intelligence at BSRIA.

But Wood Mackenzie senior consultant for base metals Yanting Zhou told Stockhead that longer term the biggest driver will still be EVs and the associated power infrastructure such as the charging facilities.

“We believe that the volume of copper demand from the EV side will become significant after 2025,” she said.

“Globally in 2018 we estimate that the total copper demand coming from EVs itself and the charging infrastructure was around 300 kilo-tonnes and in 2025 it’s going to be around 1 million tonnes.

“So around that timeframe, 2025, that’s when the demand from EV is really going to take off.”

Wood Mackenzie’s forecast for copper demand is still positive for this year, with refined copper consumption growing by 1.8 per cent.

But Zhou said after this year demand would slow down through to 2021.

At the same time though, there is a tightening of supply.

Global copper stockpiles have been falling all year, dropping by an estimated 85,000 tonnes over the past four weeks.

>>Read: Tim Treadgold: Copper bottoms, gets ready to boil


“In the next three years we actually forecast a deficit market for the copper cathode, refined copper,” Zhou said.

“So that will be supportive of price despite slowing demand.”
 

Tight supply

S&P Global Market Intelligence commented recently that major new copper discoveries are at decade-long lows despite a significant increase in the amount of cash being spent on copper exploration.

>>Read: S&P confirms – the world is struggling to find more copper

However, Zhou told Stockhead that there are more than enough projects in the pipeline – it’s just that the copper price isn’t high enough to drive those projects into production.

“There hasn’t been enough projects committed to coming online and if the copper price remains at the current level or a similar level, this will not be enough to incentivise enough copper projects in the longer term,” she said.

“Remember the timeframe to develop a copper project is around five years. So in that five-year time horizon you are going to see a supply deficit.”

Right now the copper price sits at around $US2.63 ($3.85) per pound and Wood Mackenzie’s long-term incentive price is $US3.30 per pound.
 

Copper projects in the pipeline

Havilah Resources (ASX:HAV) yesterday released the pre-feasibility numbers for its Kalkaroo project in South Australia.

“We are happy that we’ve got a reasonable margin there, yes it’s a big capital ask to get the project in production, but at least the fundamental economics supports a large open pit operation,” CEO Walter Richards told Stockhead.

The mine is expected to produce an average of 30,000 tonnes of copper and 72,000 ounces of gold each year over an initial 13-year period.

Kalkaroo is expected to require a pre-production capital spend of $332m and have C1 costs of $US1.67 per pound.

Caravel Minerals (ASX:CVV) also recently released early economics for its namesake copper project.

A scoping study shows that the Caravel mine will run for 23 years producing 16 million tonnes per annum (Mtpa) in the first five and ramping up to 30Mtpa from year six.

A scoping study is the first proper look at whether a resource can be mined economically.

The initial capital spend required to build Caravel is $481m and it is expected to have C1 cash costs of $US1.45 per pound.

Hot Chili (ASX:HCH) is progressing its Productora and Cortadera projects in Chile.

A pre-feasibility done by Hot Chili on its Productora deposit shows it will have an initial 10-year mine life based on production of 66,000 tonnes of copper concentrate and 25,000 ounces of gold each year.

Managing director Christian Easterday told Stockhead last month that Cortadera could add to that, being a major discovery extending from surface and exhibiting all the characteristics of a long-life shallow open pit mine in addition to numerous satellite bodies.

Productora is estimated to require a capital spend of US$725m and have a C1 cash cost of $US1.47 per pound, including by-product credits.

Stavely Minerals (ASX:SVY) yesterday reported high-grade copper hits at its Thursday’s Gossan project in western Victoria.

Drilling delivered grades of up to 5.05 per cent copper and 6.06 grams per tonne gold.

Stavely previously completed a conceptual study on the potential for copper concentrate production from Thursday’s Gossan that the company said returned positive numbers for net revenue, net present value and internal rate of return.

NPV and IRR are metrics used to assess the profitability of a project. The higher the NPV and IRR, the more profitable a project will be.

PolarX (ASX:PXX) is advancing its huge Alaska Range project.

In February, managing director Frazer Tabeart told Stockhead that it had signed a confidentiality agreement with a major mining company “with a view to them investing in PolarX”.

Last month we found out that major was $4.71 billion Lundin Mining — a diversified Canadian base metals miner with operations in Chile, the US, Portugal and Sweden.

The Saturn magnetic body at the Alaska Range project is comparable in scale and geometry to Grasberg, one of the world largest copper-gold mines.

 

At Stockhead, we tell it like it is. While Caravel Minerals is a Stockhead advertiser, it did not sponsor this article.

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