Newmont targeting several copper “mega-projects”
Copper may be flirting with record highs but the metal is far from peaking as the energy transition revs up, according to Newmont Corp. Chief Executive Officer Tom Palmer.
Futures hit $10,000 a metric ton on Thursday for the first time since 2011 as mines struggle to keep up with surging demand. Newmont, the world’s largest gold producer, is increasing exposure to copper through several “mega projects,” Palmer said on an earnings call.
Even if just one materialises, copper will account for 15-20% of the company’s total output by the end of the decade, he said.
“I’m pretty excited about having good exposure to copper at that time when the world is going through the energy transition,” Palmer said on an interview with Bloomberg TV following the earnings call:
“Copper’s got a pretty good story in front of it. I think its day in the sun is more towards the end of this decade.”
The copper push doesn’t mean Palmer has a downbeat view on gold. He sees bullion prices holding their current “very healthy levels” or even moving higher given fiscal and monetary stimulus. India should remain one of the key sources of demand after the country recovers from the Covid-19 tragedy, Palmer said.
Palmer was speaking on the day Newmont released solid first quarter results for 2021:
- Produced 1.5 million attributable ounces of gold and 317 thousand attributable gold equivalent ounces from co-products
- Reported gold CAS* of $752 per ounce and AISC* of $1,039 per ounce
- Generated $841 million of cash from continuing operations and $442mn of Free Cash Flow (99 percent attributable to Newmont)*
- Full-year production continues to be back-half weighted, in line with 2021 guidance**
- Declared first quarter dividend of $0.55 per share, consistent with the previous quarter***
- Ended the quarter with $5.5bn of consolidated cash and $8.5 billion of liquidity with a net debt to adjusted EBITDA* ratio of 0.2x
- Reduced $550mn of debt outstanding with available cash in April 2021
- Executed $3bn sustainability-linked revolving credit facility, demonstrating Newmont’s unwavering commitment to industry-leading environmental, social and governance (ESG) practices
- First production from Boddington Autonomous Haulage System, delivering safety and productivity improvements; leading the way as the industry's first autonomous haulage fleet
- Announced acquisition of GT Gold,+ located in the prospective Golden Triangle adding profitable copper and gold exposure to Newmont's industry-leading project portfolio
- Continued focus on fatality prevention through global application of critical controls
Copper production from top ten companies to increase by 3.8%
Copper production from the world’s top companies is set to increase by up to 3.8% this year, following a fall of 0.2% in 2020, GlobalData analysis reveals. Last year’s marginal slump saw production drop to 11.76 million tonnes (Mt).
The initial impact of the COVID-19 pandemic on mining operations was immense, however, six of the ten largest copper producers succeeded in increasing output last year. In 2021, copper production from the top ten copper companies is expected to bounce back, rising by up to 3.8%, to reach 12.2Mt, according to GlobalData, a leading data and analytics company.
The highest increase in copper production was by Canada’s First Quantum, which, despite all the challenges, reported 10.4% growth in 2020. The company’s Sentinel mine in Zambia and Cobre Panama were key contributors to this growth. While the latter remained under care and maintenance between April and August 2020, it delivered record production levels during the subsequent months.
Codelco, the world’s largest producer of the red metal used in electric vehicles, also bucked the trend.
Vinneth Bajaj, Associate Project Manager at GlobalData, commented: “Despite Codelco reporting over 3,400 active cases during July 2020, the company achieved 1.2% growth in its production in 2020. The company implemented a four-phase plan, as part of the COVID-19 measures, to ensure the health and safety of its employees, while also avoiding any significant impact to its copper output.”
Although the overall impact was minimal, declines in production were observed from Glencore (8.2%), Antofagasta (4.7%), BHP (3.9%) and Freeport McMoRan (1.3%). Reduced operational workforces due to COVID-19 measures, lower ore grades and production halts due to maintenance were the key disruptors to output during 2020.
The move towards electric vehicles and clean energy from renewables sources such as solar panels and wind turbines has driven the copper price to all-time highs. Copper has been among the best performers over the last month where metals ranging from aluminum to iron ore have surged to their highest prices in years. The rally is being fueled by stimulus measures, near-zero interest rates and signs that economies are recovering from the global pandemic.