Focus: U.S. copper projects gain steam thanks to electric vehicle trend

THEMAC Resources

24/01/2019 12:00

(Repeats story from earlier Thursday with no change to text)
    By Ernest Scheyder
    YERINGTON, Nev., Jan 24 (Reuters) - Once seen as a laggard
in the global mining industry, U.S. copper deposits have quietly
drawn more than $1.1 billion in investments from small and large
miners alike as Tesla and other electric carmakers scramble for
more of the red metal.
    Four U.S. copper projects are set to open by next year - the
first to come online in more than a decade - with several mine
expansions also underway across the country, home to the world's
fifth-largest copper reserves, according to the U.S. Geological
Survey.    
     The rising popularity of electric vehicles - which use
twice as much copper as internal combustion engines - and
increasingly pro-mining policies in the U.S. while other nations
exert greater control over their mineral deposits are fueling
the spending, according to mining executives and investors.
    "Fifteen years ago, U.S. mining was thought to be a dead
industry, but now it's a profitable area for us," said Richard
Adkerson, chief executive of Freeport-McMoran Inc  FCX.N .
    The Phoenix-based miner, which last month relinquished
majority control of the world's second-largest copper mine under
pressure from the Indonesian government even though it will
remain the project's operator, is set to open a $850 million
expansion of one of its Arizona copper mines next year. 
    "The U.S. is really the core for our future growth,"
Adkerson said. The U.S. is home to half of Freeport's reserves.
    The buildouts are expected to boost U.S. copper production
by at least 8 percent in the next four years, according to data
from the International Copper Study Group and DBS, with Nevada
Copper Corp  NCU.TO , Taseko Mines Ltd  TKO.TO , THEMAC
Resources Group Ltd  MAC.V  and Excelsior Mining Corp  MIN.TO 
aiming to open copper mines by the end of 2020. 
    The development trend has gone largely under the radar, with
copper industry customers like Tesla Inc  TSLA.O  - rather than
miners themselves - grabbing the headlines. But that is slowly
changing. 
    The prospect of a copper boom in the U.S., where the Trump
administration is pushing for mining permit approvals to be
approved five times faster and where resource nationalism fears
are largely absent, is starting to draw major institutional
investors. 
    Industry analysts recommend investors buy shares of
companies building new U.S. copper mines, a marked change from
just 12 months ago when most recommendations were to hold. Four
analysts, for instance, advise buying Taseko shares; none did a
year ago. These analysts also have set price targets for the
miners at more than double current trading levels, according to
Refinitiv data.
    "The copper industry needs areas of good supply with low
political risk, and that's what we get in the United States,"
said Stephen Gill of Switzerland-based Pala Investments, Nevada
Copper's largest shareholder.
    
    'COPPER IS KING'     
    Nevada Copper's Pumpkin Hollow copper project in Yerington,
Nevada is less than 60 miles (100 km) from Tesla's massive
Gigafactory, a proximity that Gill said was a key factor in
Pala's investment.
    Surrounded by onion farms and backed by the Sierra Nevada
mountains, the Pumpkin Hollow mine will produce more than
100,000 tonnes of copper each year once its underground and
open-pit portions fully open, which is slated to happen in
phases.
    "Copper is king for this electrification trend taking over
the global economy," said Matt Gili, Nevada Copper's chief
executive. "We see demand increasing steadily in the years ahead
and, so far, supply is not keeping up."
    Majors Freeport, Rio Tinto  RIO.L  and BHP Group Ltd
 BHP.AX  also have U.S. copper projects of their own under
development. These come just as copper prices are forecast to
rise more than 10 percent in the next two years, according to
Canaccord Genuity.
    Nevada Copper's project has been largely supported by local
residents in a state whose economy is linked to mining. But
elsewhere, there has been opposition due to concerns about water
rights and native lands.
    "Green technologies can have a dark side," said John Hadder
of Great Basin Resource Watch, a Nevada-based environmental
group.  
        
    SMALL VERSUS BIG
    Nevada Copper and other junior miners have an advantage over
larger peers. Their smaller balance sheets force them to plan
small copper mines, making permitting and negotiations with
local residents easier.
    Rio and BHP, for instance, have been trying since 2001 to
open Arizona's Resolution Copper mine, one of the world's
largest projects of its type.
    The two are still waiting for regulatory clearance, having
spent more than $1.3 billion since 2001, in a delay brought on
partly by a dispute involving local American Indian tribes. 
    The mine is not slated to open until at least 2030. The U.S.
Forest Service is expected to post a draft environmental study
on the project by this summer, after which American Indian
groups and others will be able to give feedback.
    Rio is also studying ways to open the mine sooner - perhaps
a year or two - by making engineering changes, but nothing has
been finalized, said Arnaud Soirat, head of Rio Tinto's copper
and diamond businesses.
    Resolution is on U.S. federal land, complicating the
development. Many of the projects that are set to open in the
next two years, though, are on private land, fueling an easier
path to bring copper to a hungry market.
    "I'm convinced over time there will be a global movement
toward renewable energy generation and electric vehicles ...
that means the world will need our U.S. copper," said Freeport
CEO Adkerson.

 (Reporting by Ernest Scheyder
Editing by Amran Abocar and Chris Reese)
 ((ernest.scheyder@thomsonreuters.com; Twitter: @ErnestScheyder;
+1-713-210-8512; Reuters Messaging:
ernest.scheyder.thomsonreuters.com@reuters.net))