SIERRA GORDA, Chile – Invisible but ubiquitous and indispensable.
That’s one way to characterize the red metal – copper – that helped to bring about the age of electricity, with its use in motors, generators, transformers and transmission lines. Today, the demand for it is higher than ever and expected to outstrip supply in coming years and decades as the world moves to curb planet-warming greenhouse gases through increased use of renewable energy and electrification of transportation. Think wind turbines, solar panels, inverters, electric vehicles and battery packs.
While demand for the metal known for its high conductivity is skyrocketing and prices are up, supply is constrained by the decline in ore quality, mines becoming depleted and greater difficulty in building new ones. More than a century ago ores had over 1.6% copper content but now that’s about 0.5%, meaning that one ton of copper requires the processing of 200 tons of ore.
There are several ways to increase supply: Expand current mines, introduce new technology to economically extract copper from lower-grade ore, increase efficiency, recycle or gain approval and build new mines – a task the International Energy Agency says takes 16 years now.
In December 2023, Japanese trading giant Marubeni and London-listed firm Antofagasta took the first route by approving investments to double the copper concentrator capacity at their Minera Centinela mine in northern Chile’s Atacama Desert. The USD 4.4 billion expansion of the mine, which has strong green credentials like using raw seawater, 100% renewables and electric vehicles, will add the equivalent of 170,000 tons of copper annually. It’s expected to start processing in 2027, launching Centinela into one of the leading copper mines in the world by output. Tokyo-based Marubeni owns 30% of Centinela, first investing in two predecessor mines in 2008, and Antofagasta owns the rest.
Iván Arriagada, Antofagasta’s CEO, notes such brownfield projects are easier and faster to build than greenfield ones.
“One of the advantages that we have is that we can grow our projects by means of developing the mineral inventory that we already have in production. So, in the case of Centinela, which is a good example, we are able to move quicker to market because we already have an operating asset,” he says. “We already have basic infrastructure. The team is in place. So, we are able to plug in an expansion much more efficiently, which means less time.”
Helping Decarbonization and Going Green Itself
Centinela will need that new capacity.
Arriagada expects copper demand to increase by 6 million metric tons between now and 2030 or 2035, noting that this amount is equivalent to the largest copper producer in the world, Chile at 5.5 million tons annually. (A “quite significant” increase, he says.) And that’s at the conservative end of some estimates. The shortage of projects to increase supply and high demand make him confident.
“Certainly, we are positive about the fundamentals of the copper market mid and long term. And the good thing is most of that – over two-thirds – is associated with the energy transition,” he says. “It's going to be required in all markets globally, in emerging economies as well as developed economies.”
For some of the keys to that transition, for example, solar power and offshore wind turbines, they require two to five times the quantity of copper for each megawatt of installed generating capacity versus conventional thermal sources like natural gas and coal, according to S&P Global Market Intelligence’s 2022 report “The Future of Copper: Will the looming supply gap short-circuit the energy transition?” EVs require four times the amount versus cars with internal combustion engines, says Marubeni.
While helping to supply a critical transition metal, Centinela has made moves to lower the ecological impact of the resource- and energy-intensive mining and production process, including using seawater pumped 150 kilometers from the Pacific Ocean, and renewables from 2022. In the driest place on earth, outside of the Antarctic, the Atacama Desert, which is the nation’s largest copper producing region, usage of rivers and groundwater has been a contentious issue. In terms of costs, using straight seawater is a middle ground between using desalinated water, which entails the expense of building and operating a desalinization plant and disposing of the brine left over from the processing, and using underground or river water. Tapping such land-based water also isn’t socially and environmentally sustainable in the long run, and seawater usage helps to maintain good relationships with the local communities hosting the mines.
And Centinela is building upon its green efforts, such as introducing a new fleet of 50 electric pickup trucks and testing hydrogen fuel-cell electrification of heavy duty machinery, as part of its plan to slash by 50% Scope 1 and 2 carbon emissions by 2035 versus 2020. In 2022, the firm finished fully automating the Komatsu dump trucks, which weigh about 628 metric tons when fully loaded with ore, used at the Esperanza Sur pit, increasing efficiency and lowering costs. As a result of some of these steps and others, it attained the industry-sponsored Copper Mark in 2021, signifying that it uses responsible production practices and contributes to UN Sustainable Development Goals.
“We have to work harder to convince people that there is a lot of technology and there is a lot of environmental commitment in the mining industry,” says Sergio Jarpa, the CEO of Santiago-based Marubeni Copper Holdings, a wholly-owned Marubeni subsidiary.
Mining Technology Tales
One area where Centinela has led is in thickened tailings: The waste left over from ore processing and stored in tailing deposits that can be two hundred meters high. Issues with these facilities include water evaporation, airborne dust, large footprints and the potential for failure. The use of thickened tailing deposit technology, which it introduced in 2012, helps to address those issues, says engineer Joaquin Martinez, the company’s manager for sulfide ore tailings. Equally important, the technology reduces construction and leakage risks and lowers capital expenses by reducing the need for more such dams.
“The solids are 40% to 52%. Conventional tailing dams are about between 66% and 67%. And we recover about 6,500 square meters [2 Olympic-size swimming pools] of water daily” by pumping water up from underneath the dam reservoir, he says, standing on the grey, slightly damp and cracked surface reminiscent of a lunar landscape. “This scale, 100,000 tons per day of tailings, is the largest in the world.”
The seawater – which is used to process the finely ground sulfide ore, the consistency of baby powder, in a chemical and heat treatment – when it evaporates creates a salt crust on the surface helping to prevent airborne dust, and the stability of the drier tailings enables a gentle slope upward from and slightly higher than the dam, meaning a smaller footprint, he adds.
In August, Centinela complied two years ahead of schedule with the Global Industry Standard on Tailings Management, the first such global benchmark integrating social, environmental, technical, and risk and disaster management considerations into its compliance framework.
For Marubeni and Antofagasta, the Centinela expansion decision looks to be a harbinger of a long future ahead. Indeed, the two, Jarpa says, currently are looking at new projects and exploration in Chile. He and Arriagada agree that the relationship has worked well. “We are very pleased with the relationship in terms of sharing a lot of the values and principles together,” adds Arriagada. “We will look at other opportunities as they come, and I hope that we will be able to partner, as well, in those other opportunities that may come.”
All information contained in this article is based on interviews conducted from November 2023.
