copper

With demand for critical minerals projected to increase dramatically against the backdrop of geopolitical tension and strained supply chains, the European Union has released its long-awaited action plan to “ensure the EU’s access to a secure, diversified, affordable and sustainable supply of critical raw materials.”

The Critical Raw Materials Act (CRMA) presented to lawmakers in Brussels on March 16, includes a comprehensive set of actions aimed at shoring up European critical mineral supply chains.

At the EU level, the CRMA would streamline the permitting process for raw materials projects and allow for selected “Strategic Projects” to benefit from support for access to financing and shorter permitting timelines (24 months for extraction permits and 12 months for processing and recycling permits).  The Act also requires EU member states to develop national programs for resource exploration.

An updated critical raw materials list is complemented by a list of “strategic raw materials” deemed “crucial to technologies important to Europe’s green and digital ambitions and for defense and space applications, while being subject to potential supply risks in the future.”

The Act also sets forth clear benchmarks for domestic capacities to diversify critical mineral supply by 2030:

• At least 10% of the EU’s annual consumption for extraction,
• At least 40% of the EU’s annual consumption for processing,
• At least 15% of the EU’s annual consumption for recycling,
• Not more than 65% of the Union’s annual consumption of each strategic raw material at any relevant stage of processing from a single third country.

Followers of ARPN will be interested to learn that the Act designates copper and nickel, metals ARPN has long considered indispensable for a number of reasons - not least because of their status as “gateway metals” yielding access to critical co-products – as critical raw materials.   With nickel added to the U.S. Government Critical Minerals List in 2022, copper remains the outlier – the most “critical non-Critical” as we have said in the past.

Writes Mark Burton for Bloomberg:

“Copper, one of the largest industrial-metal markets, wasn’t included in the EU’s last list of critical raw materials published in 2020. Copper’s diverse uses in manufacturing, construction and industry mean it’s widely viewed as a bellwether for global economic activity, but surging usage in electric vehicles and renewables are fueling fears of deep shortages in years to come.”

 Burton cites Glencore Plc. chief executive Gary Nagle who said that copper production would need to almost triple by 2040 if the world was to meet net zero carbon emission goals, with demand driving prices up by some 15%.

He adds:

“The nickel market, meanwhile, was rocked by an unprecedented price spike last year in the wake of the invasion of Ukraine, which threatened to throttle supplies from Russia. In future, the world will become increasingly reliant on supplies from Indonesia, where supply of the key battery metal is expanding rapidly.”

Nickel was added in the first official USGS update to the 2018 in 2022, bearing testimony to the fact that policy makers and other stakeholders increasingly acknowledge the challenges associated with providing reliable supplies of the critical minerals underpinning the “Tech Metal Era.”

The United States has yet to designate copper a critical mineral in its official government list, but an effort to correct this omission is underway with senators calling on the Secretary of the Interior to use her power to short-circuit the standard three-year review timeframe for the critical minerals list and change copper’s designation to “critical” ASAP.

In a letter to Secretary Deb Haaland in early February, U.S. Senators argued that “[b]y recognizing copper as a ‘critical mineral,’ the United States’ federal government can more effectively ensure a secure and reliable supply of domestic copper resources in the years to come at all points of the supply chain including recycling, mining, and processing. Given the enormous investment required, the time lag for new sources of supply, and projected demand, time is of the essence,” with Senator Kyrsten Sinema (Ind.-Ariz.) adding in an interview that this should be a “no brainer” because “[w]e have major gaps in both our ability to mine and process these minerals to ensure our energy security for the future, and the administration knows how important copper is to our domestic and national security.”

While European Commission President Ursula von der Leyen expressed confidence that the Act would “significantly improve the refining, processing and recycling of critical raw materials here in Europe,”observers lament that the act was “short on details and excluded important raw materials needed for the green energy transition such as zinc, silver and aluminum.” 

Comparing the CRMA to the U.S Inflation Reduction Act, which, in his view “was heavy on providing monetary firepower,” Colin Hamilton of BMO Capital Markets commented that the “the EU version has limited mention of funds but lots of policy rationale.”

The EU sees partnerships with “like-minded countries willing to strengthen global supply chains” as critical for EU strategy to succeed, and has proposed a “Critical Raw Materials Club,” a concept that was already part of U.S.-EU discussions earlier this year amidst European concerns that the U.S. Inflation Reduction Act could end up penalizing non-U.S. companies.  Against the backdrop of rising tension with China and Russia, in a joint statement earlier this month, U.S. President Biden and EU Commission President von der Leyen vowed to iron out such differences and pledged close cooperation on the critical minerals front.

The CRMA will now be discussed and voted upon by the European Parliament and the Council of the European Union before its adoption and entry into force, and ARPN will be sure to keep tabs on related developments.

As a highly versatile key mainstay metal, copper has been a building block of humanity’s progress. As a gateway metal, it yields access to critical minerals.  It also is an energy metal — an indispensable component for advanced energy technologies, ranging from EVs and wind turbines to the electric grid and solar panels.

But for all its traditional and new applications and surging demand in the context of the green energy transition, copper is currently not considered a “critical mineral” by the U.S. government.

A group of members of Congress have set out to change this, and have sent a letter to U.S. Department of the Interior Secretary Deb Haaland urging the designation of copper as an official U.S. Geological Survey Critical Mineral.

The letter sent by Sens. Kyrsten Sinema (Ind.-Ariz.), joined by Sens. Mark Kelly (D-Ariz.), Joe Manchin (D-W.Va.), Mike Braun (R-Ind.), Raphael Warnock (D-Ga.), and Mitt Romney (R-Utah) cites new findings by the Copper Development Association (CDA) indicating that copper’s increased supply risk surpasses the USGS threshold necessary to be added to the U.S. Government’s Critical Minerals List.

“By recognizing copper as a ‘critical mineral,’ the United States’ federal government can more effectively ensure a secure and reliable supply of domestic copper resources in the years to come at all points of the supply chain including recycling, mining, and processing. Given the enormous investment required, the time lag for new sources of supply, and projected demand, time is of the essence,” wrote the Senators.

In a recent piece that also calls for a reassessment of copper’s current non-critical mineral designation, Cullen S. Hendrix with the Peterson Institute for International Economics argues that while copper is widely mined and processed relative to listed critical minerals on the U.S. government’s list, “the security of diffuse global supply chains and production in US-friendly economies is still vulnerable to disruptions in producer countries. The ability and willingness of copper producing countries to keep supplying copper can change rapidly.”

He points to current trends in Peru, a key copper mining country, where resource nationalism has reared its head, as well as developments in neighboring Chile, that may indeed affect both countries’ “ability and willingness” to supply copper to the global market and elaborates that “designating copper as critical to national and economic security would lead to enhanced scrutiny from the USGS, which tracks minerals markets, production, and reserves. Industry advocates also believe that the designation might lead to streamlined permitting processes that would facilitate more domestic production.” 

In an interview, Sen. Sinema said that “[t]his should be a no-brainer,” adding that “[w]e have major gaps in both our ability to mine and process these minerals to ensure our energy security for the future, and the administration knows how important copper is to our domestic and national security.”

As followers of ARPN well know, ARPN’s Daniel McGroarty has called for the designation of copper as a critical mineral on several occasions, and has submitted public comments to USGS to this effect.

The U.S. Government Critical Mineral List is updated at least every three years and saw its last update in late 2022, but the underlying statute stipulates that the Secretary of the Interior can designate additional materials to be added — and with  geopolitical tensions and resource nationalism on the rise against the backdrop of surging copper demand, now would be a good time to change copper’s designation to “critical.”

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