The global rush for copper is front and centre again as the world’s largest miner, BHP, sought to expand its copper portfolio through a continued attempt to takeover Anglo American. Although the back and forth between the two mining giants has sent clear signals about copper’s soaring market value, it’s also obscured the industry’s most critical problem.
Copper is the lifeblood of the energy transition: from electric vehicles to solar farms and a more efficient power grid – all these innovations require copper. According to McKinsey, meeting electrification will increase annual copper demand to 36.6 million metric tons by 2031. And so, it’s no surprise that BHP looked to Anglo, with its vast copper mines in Chile and Argentina, to capitalise on this rising demand.
Although bullishness from big producers like BHP is positive for the copper market, as Barrick Gold’s CEO Mark Bristow rightly pointed out, the reality is that consolidation will not bolster the world’s copper supply. The International Energy Agency (IEA) estimates that existing mines and projects under construction will only meet 80% of copper needs by 2030. The failure to scale this remaining 20% has far reaching consequences: a lack of copper could ultimately short-circuit the global energy transition and undermine climate goals.
As the BHP deal potentially sparks further M&A, with other mining companies looking for their own copper deals, what the world really needs is new investment in copper- more than US$150 billion by 2032.
Investment challenges
Yet, investors are not committing nearly enough capital. Complex government regulations and growing social and environmental resistance to the extractives industry means money is not flowing into new mining projects.
The copper industry’s ability to attract investment and keep up with demand depends on local community support and obtaining government permits, especially among the communities in the Global South where these copper deposits often lie. You only have to look to Panama’s recent US$10bn dollar mine closure to appreciate the cost of fierce local objection.
De-risking investment and scaling copper supply therefore requires the mining industry to improve sustainability and impact. We need to reconfigure mining as a driver of socio-economic development to, in turn, secure a social licence from local communities to operate.
Namibia takes the lead
Namibia, which has some of the world’s largest unexplored reserves of lithium, copper, and uranium, has is leading the charge on this sustainable change. Mining makes up 10% of Namibia’s GDP every year, and has consistently demonstrated robust and steady growth, serving as a key driver of economic development.
But sustainable development is more than just contributing to GDP, it’s about working with communities to build a healthy and thriving local economy. This means offering paid and equitable jobs for employees, supporting host communities through economic development projects and acting as steward of the surrounding natural habitat.
Above all, sustainable development is about moving away from a mining model which extracts mineral wealth and into a model which builds shared prosperity. Mining is an unavoidable fact of the energy transition, and the industry has an important responsibility to mitigate environmental damage and ensure that host communities are fairly compensated for their contribution.
This is where Namibia stands apart as a regional leader. Companies such as ours cannot drive this change alone, and government support has been critical in creating an enabling environment for the fair and equitable mineral beneficiation.
Namibia is already driving forward geopolitically savvy, and sustainability-driven regulation, which fosters mutually beneficial commercial opportunities for both Namibians and investors.
The government’s decision last year to ban the export of unprocessed iron ore, is a paramount example. The policy transforms Namibia from an exporter to a producer, and in doing so, strengthens domestic supply chains and boosts local processing activities- helping to maximise local profits.
Despite accusations of resource nationalism, export bans such as this don’t just significantly enhance the local economy but contribute to keeping copper prices at around $10,000 per ton. This gives a notoriously volatile copper market the stable production base it so desperately needs and differentiates the country as an attractive and reliable destination for foreign investment.
Neighbouring mining nations should look to Namibia as blueprint for how a modern mining operation should function. In the quest for a just transition, Namibia recognises that the dual challenges of meeting global copper demand and supporting host communities are not mutually exclusive, but that embedding ESG practices makes copper mining more attractive for both communities and investors.
As the world’s copper shortage reaches critical heights, the industry would do well to recognise the solution that’s already there.
*John Sisay is the Chief Executive Officer of Consolidated Copper Corp, established in 2022 to engineer sustainable brownfield restart plans for three mines at the heart of Namibia’s copper industry.
