Money is pouring in to copper exploration, as prospectors and bankers foresee a crunch in copper supplies. But the money has not yet yielded many discoveries, according to a consultancy that tracks the metals supply chain.
The search for new sources of copper, vital to all industrialised societies, is the result of a demand-supply imbalance driving the boom in metals prices.
In contrast to the jump in financing, December produced only one “new initial find” – a preliminary discovery that might become an economically viable copper deposit.
November also yielded only a single initial find, a decrease from three in October. A lag between exploration funding and discoveries is common, said Michael Chender, chief executive of MEG. But it is too early to tell if the volume of exploration funding is yielding results that are anywhere near big enough to meet long-term copper demand, he added.
Although there were more announcements of copper discoveries in the second half of 2010 than the first half, most related to the extension of ore bodies next to existing mines rather than the unearthing of entirely new deposits, according to MEG.
“There has been a jump in grassroots exploration as companies realise the need for new discoveries,” says Mr Chender. This year, supply shortages have helped push the copper price to $10,000 per tonne, creating fortunes for all the big copper miners.
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“All of the projects that are being built now have been known about for a long time,” says Mr Chender. Some were discovered 20 years ago but will not enter production until the middle of this decade. “The inference is that it could take another 20 years for a new generation to progress from greenfield discoveries to mines.”
More immediate problems loom in the next few years as copper production falls amid booming Chinese demand. Since 2005, mined copper has fallen short of production targets by at least 5 per cent per year, according to Brook Hunt, the metals consultancy. That is equivalent to about 1m lost tonnes per year.
The many copper prospectors searching for new deposits to feed into the supply pipeline may all have retired by the time any of the projects come on line.