Brief discussion: Gorgeous copper is comparable to gold

one

Copper is very expensive, 68,760 yuan per ton, which is both familiar and unfamiliar.

First, let's learn about the world's copper production and application, and which major copper mines are controlled by the United States. No new copper mines have been discovered in several years. If China wants to make great plans in new energy, it can only compete with Western capital for the existing stock.

Why do I say that? Because when copper becomes gorgeous, even gold will be inferior to it!

The amount of copper used in new energy vehicles is much higher than that in gasoline and diesel vehicles.

A hybrid car uses 40 kilograms of copper, a plug-in hybrid car needs 60 kilograms of copper, and a pure electric car uses as much as 83 kilograms of copper, which is something no one expected.

In the electric vehicle industry, 600,000 tons of copper were used in 2021, and it is expected to increase to 2.9 million tons by 2030, a five-fold increase in ten years. This is the research opinion released by Wood Mackenzie, a company specializing in energy and metals.

The whole world, including Chinese companies, is desperately looking for lithium mines, but almost no new copper mines have been discovered in recent years.

In the ten years from 2011 to 2020, only 15 new copper mines were discovered in the world, and the geological conditions were worse than each other. No copper mine locations have been explored since 2020; while 87 were discovered in the previous decade.

The cost of finding copper ore has climbed to $318.75 per ton, more than 10 times that of the previous decade, but demand has skyrocketed, so mining has to be carried out no matter how high the cost or how poor the conditions.

Today's new copper mining projects are something that only big capital can afford.

It takes at least five years for a copper mine to be built and mined. In some countries, even after several prime ministers have been replaced, copper ore may not be seen. Many poor and small countries have neither funds nor technology, and can only follow the arrangements of big capital to get a piece of the pie.

The United States is very cunning. The copper reserves they control have long been the largest in the world, but they simply refuse to mine them domestically. Among them, the Pebble Copper Mine and the Resolute Copper Mine rank first and second in the world in terms of reserves.

In 2001, Northern Dynasty Company discovered the Pebble Copper Mine in Alaska and started small-scale mining; in 2014, the mine was closed by the U.S. Environmental Protection Agency; in 2021, the United States announced permanent protection of Bristol Bay where the copper mine is located, completely blocking the possibility of reopening the world's largest copper mine .

In 2020, the United States Geological Survey released statistics showing that the country has copper reserves of 51 million tons, ranking sixth in the world, accounting for 5.9%; correspondingly, the United States' copper demand is 1.767 million tons, accounting for 7% of the global total demand.

In 2021, the United States produced 1.266 million tons of copper concentrate, including output from small copper mines and mining by U.S. capital abroad.

Although the United States has a low level of copper development, they control the discourse power of the global copper industry chain. Freeport-McMoRan alone controls three of the world's top ten copper mines, namely the third largest Morenci copper mine in Arizona, the ninth largest CerroVerde copper mine in Peru, and the tenth largest Grasberg copper mine in Indonesia.

The American Freeport alone has become the world's second largest copper producer by controlling copper mines in other countries, with an annual output of 986,000 tons, second only to BHP Billiton.

But the appetite of capital will never be satisfied. In order to further control the copper industry chain and seize resources from other countries, on June 11, 2019, the US State Department issued the "Energy Resource Governance Initiative", claiming that the United States would share mining technology with member countries of the initiative to help resource-rich countries explore and develop lithium, copper, cobalt, etc.

Australia, Peru, the Philippines, Argentina, Congo, Zambia, Namibia, Botswana and Brazil have successively joined the initiative. These countries are called "strategic raw material warehouses" by the United States.

Various countries have been raising questions, accusing the United States of plundering resources and building mineral hegemony under the guise of helping with development.

two

Copper was very precious in ancient times. China was the first country in history to use copper alloys to cast currency, which was durable, so copper coins were a popular hard currency in every dynasty.

In the 1960s, after the beginning of the Third Industrial Revolution, breakthroughs were made in mining technology, but copper was still very precious and was only used in large quantities in key components, such as motor coils and high-grade electrical wires.

The manufacturing of weapons and equipment is even more inseparable from copper, such as automatic control motors, wires, cables, detonators, oil pipeline sealing rings, vacuum tubes, radar electronic components, etc. The most common are the countless bullets and artillery shells made of brass.

Before the 1980s, North American mines provided most of the world's copper; since then, production in Europe, Asia, and South America has caught up.

In 2021, the world's proven copper reserves were 880 million tons, of which the Americas accounted for 43.2% and production accounted for 47% of the world's total. Both reserves and production are relatively concentrated.

three

Before the First Industrial Revolution, copper produced by Sweden's Faro Mine supplied more than half of the European market and monopolized the European copper industry.

Watt's improved steam engine stimulated mining efficiency, mining costs were greatly reduced, and copper began to be in excess of demand.

From 1760 onwards, copper prices continued to fall until 1800, when the price was only 30 cents per pound. At that time, copper was not yet widely used in industrial products.

It was not until the invention of the rolling mill that copper bolts of sufficient hardness could be stamped out; coupled with the popularization of copper plating technology, ironclad warships were able to fight on the oceans.

Because the components are copper-plated, the hull can resist seawater corrosion.

This suddenly increased the use of copper. In order to win the war for maritime supremacy against France, Britain began to transform its entire fleet in the 1780s, causing the price of copper per pound to rise from 29 cents to 59 cents.

The soaring copper prices in turn stimulated the mining industry, leading to the emergence of global copper trade and the discovery of the "copper mecca" of Chile.

The Crimean War broke out in 1853. The newly invented copper bullets were incredibly powerful and were soon sent to the battlefield in large quantities. Copper cables also began to be laid in large quantities.

In 1861, the Civil War broke out among the U.S. states in a struggle for dominance over trade tariffs. The demand for brass buttons, copper bullets, and kettles skyrocketed, and the miners' strike led to a reduction in copper production, further pushing up copper prices.

After the outbreak of World War I, copper prices completely let loose. In May 1916, Britain banned copper futures speculation on the London Metal Exchange, marking the first time a human government actively intervened in copper prices. The following year, the British Ministry of Munitions took over the London Metal Exchange, locked in copper prices, and requisitioned the exchange's inventory.

In September 1918, the United States followed Britain's example and fixed the price of copper at 23.5 pounds per pound. The benefit was that it controlled the cost of America's armaments for World War I.

During World War II, countless coppers were used to make weapons and ammunition, and were also destroyed in bombings. Seeing that the stockpile was about to run out, the US government also learned from the British operation and banned the use of copper in construction, limited the amount of copper used in certain products, and the War Production Board took over the rationing of copper materials.

The huge war demand quickly increased the mining efficiency of copper mines in the United States and Chile. In the late stage of World War II, copper was no longer so scarce.

When the Korean War broke out in 1950, the United States directly joined the war and nearly used copper to extinction . The following year, the United States began to limit the price of copper, stipulating that the price per pound could not exceed US$24.64.

This price limit was maintained until 1970.

During the two oil crises in 1973 and 1981, copper supply exceeded demand and prices fell, but in general, copper prices follow the US dollar cycle - when the US dollar strengthens, copper prices rise, and vice versa.

The outbreak of the "Internet Revolution" in 1993 triggered a sharp increase in copper demand. The copper price soared from US$1,619 per ton that year to US$3,080 in just two years. In 1999, the financial crisis swept Asia and copper prices fell accordingly.

The US subprime mortgage crisis in 2008 triggered a global financial crisis, and copper prices plummeted all the way. Starting from July of that year, the price fell from US$8,940 per ton to US$2,825. In just four months, a large number of small and medium-sized copper mines around the world went bankrupt.

The sudden outbreak of the COVID-19 pandemic in early 2020 caused copper prices to fall from $6,100 to $4,371 in less than three months. However, the pandemic also disrupted copper mining, and copper prices rebounded to $6,400.

In February 2022, the United States fueled the Russia-Ukraine conflict, and the copper price hit an all-time high of $10,845. The U.S.-China trade war has been going on for almost a year, and the current copper price remains at a high of $9,155. China's demand orders have always been a topic of speculation in international copper futures.

Copper prices have experienced fluctuations for three centuries, and copper has been used to great effect by the West . Each industrial revolution has developed copper's industrial properties, driving down copper costs and expanding its application areas. However, each war has strengthened copper's financial properties, driving copper prices up sharply.

High copper prices further stimulate technological innovation, reduce process costs and expand application areas.

Four

The copper mines in the world today are monopolized by a few international giants. Copper mining is a high-investment, high-return, and high-risk job, and it also requires the ability to deal with the political risks of the country where it is located . Therefore, only capital giants can handle this kind of thing.

Since the discovery of copper mines, Chile has become just a geographical concept rather than a country, and has been hunted by international capital.

Chile has 8 of the world's 20 largest copper mines, but these mineral resources are not all controlled by Chile. Most of them are controlled by international multinational mining companies.

In 2020, the world's top 20 copper mines produced 8.8018 million tons, accounting for 44% of the global output. Among them, the production capacity of Freeport in the United States was 1.4533 million tons, Glencore was 1.1502 million tons, and BHP Billiton was 1.1065 million tons, ranking the top three in the world.

I also found in the report of the International Copper Research Organization that the world's top ten copper mines are all controlled by European and American mining groups, with a total annual production capacity of 3.705 million tons.

Three years after the epidemic, copper smelting capacity has been greatly affected, and the inventories of many countries have been basically exhausted.

In the first quarter of 2022, Chile's copper mine production fell by 136,000 tons year-on-year; in the first three quarters, the world's largest copper producer, Chile's National Copper Corporation, produced only 1.06 million tons, a year-on-year decrease of 10%.

In addition to the impact of the epidemic, Chile also encountered troubles such as mine strikes and road blockages, which once caused supply chain disruptions.

Even though the global copper ore supply is sufficient throughout 2022, the refined copper production capacity has not increased, and the situation is the same as that of the mines.

In the green industries led by China and the United States, copper, as a key raw material, will be in increasing demand, and the industry predicts that there will be a serious supply shortage in 2025.

Why is this so? It is because the development of new energy industries consumes 12 times more copper than traditional industries. The more sophisticated the new energy products, the more copper they require.

S&P has made an estimate that by 2050, the global annual demand for copper will reach 53 million tons, but the current global copper mine output is only 21 million tons. The huge consumption and limited production capacity are more than doubled, and the contradiction between supply and demand is right in front of us.

The global copper resource crisis is coming step by step. From a national perspective, China should guide its enterprises to participate in international mining competition, just like we invested in foreign lithium mines ten years ago and make arrangements in advance.

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