- A greener global energy system will rely on metals like copper.
- Copper could face a severed supply problem in the future.
- Sustainable production of copper can be achieved through a multi-layered and considered strategy.
Operating in a low-carbon economy means new technology with fewer emissions. But even tech requires materials that still need to be mined.
At Udokan Copper, part of diversified holding USM, we have been neck-deep in unravelling the challenges associated with more sustainable mining, which helped us develop a strategy for operating in a low-carbon economy and producing copper, vital for future and cleaner technologies.
Copper as the new gold
Copper is often called “the new gold,” “the new oil” or even “the metal of the future” because of its indispensable role in the low-carbon economy and high-tech industries like telecommunications, electric vehicles, renewable energy systems and carbon capture and storage.
The International Energy Agency has reported that graphite, copper and nickel will dominate mineral demand by 2040. By that year, the demand for copper from clean energy technologies will increase by 2.7 times what is was in 2020.
Bank of America estimates that the compound annual growth rate in copper consumption just from technologies needed to achieve net zero will be 3.6% by 2030.
Net substitution of copper stands below 1% of total global copper consumption, which predominantly occurs within the cable industry, with other substitutions unlikely in the near future.
Rapidly accelerating markets for electric vehicles and battery storage rely on copper. The metal will also be critical for renewable energy technologies because it can conduct electricity better than other metals.
Outpacing supply
Meanwhile, maintaining an increasing copper supply in line with rising demand may hit a stumbling block. Existing copper mines are reaching peak capacity with few new deposits being discovered, while the lead time between discovery to production has increased significantly recently.
This supply-demand imbalance in the market has led to price spikes. In May and October 2021, copper prices stopped shy of $11,000 per tonne with the market tightening.
Long term, copper fundamentals are strong and demand will most likely outpace supply in the years to come. More demand from clean energy technologies will also come in tandem with increasing demand from construction and manufacturing.
Beating the supply-demand imbalance
Despite the looming gulf between copper supply and demand, there are ways to prevent a global copper deficit:
1. Investing in exploration and greenfield projects.
2. Developing technologies to increase extraction and productivity.
3. Developing and expanding scrap copper recycling technologies to increase supply.
At Udokan, we are addressing those first two prevention strategies: investment and technological development.
With its 26.7 mt resource base and an average copper grade of 1.05%, Udokan is now the world’s third-largest untapped copper deposit and the largest in Russia.
The deposit is in a remote part of eastern Russia with harsh climate conditions and since 1949, several attempts to initiate development of the deposit failed, written off as unfeasible. The deposit was abandoned after the dissolution of the Soviet Union in the 1990s.
In 2008, we took up the project, proving too difficult until then due to the severe environment, remoteness and the complexity of the deposit’s ores. We developed a unique patented technological process that made copper extraction from Udokan ores feasible, profitable and cleaner than pyrometallurgical processing. Now, we’re rapidly moving ahead in finalizing the construction of stage one of the mining and metallurgical plant at the end of this year.
Stage one will see cathode copper and sulphide concentrate production, amounting to 135,000 tpa of copper. Stage two, undergoing a current feasibility study, will increase the processing capacity of ore from 15 mtpa to around 40 mtpa, making Udokan a global market supplier.
A sustainable production plan is crucial
This ramped up production places great responsibility on us to not only meet the increasing demand for one of the most sustainable and necessary metals for the modern low-carbon economy, but also to be sustainable ourselves.
As a greenfield project, its starting block is having international best practices in environmental safety and sustainable mining incorporated from the outset.
A successful track record of our own experiences with companies utilizing sustainable technology also gives the project solid foundations. For example, Metalloinvest, which is a producer and supplier of merchant hot briquetted iron (HBI) and iron ore products, as well as a regional producer of high quality steel, now leads in the production of HBI, a crucial element for decarbonizing the steel industry because of its use in electric arc furnaces, a technology that reduces carbon footprint by up to 50% compared to blast furnace production.
In terms of the UN Sustainable Development Goals (SDGs), our primary challenge is to reduce our carbon footprint toward climate neutrality in the long run. Last year, we worked out a climate programme to help achieve that, which estimates future scope 1, 2 and 3 emissions and identifies opportunities to reduce them.
Another important part of the strategy is to get the plant powered by renewable and low-carbon sources. More than 50% of the energy required at stages one and two of the plant will be fuelled by hydropower. Expanding the use of this renewable energy source will be vital to the project, despite being resource and time-intensive.
Achieving full carbon neutrality will also require establishing raw material and product supply chains with the lowest carbon footprint, particularly where the plant’s most carbon-intensive products are concerned, for example, steel mill balls and lime.
In line with the framework of international cooperation provided by the Paris Agreement, any remaining emissions will be accounted for by purchasing carbon offsets, its rules agreed at the 2021 Climate Change Conference (COP26).
Finally, an important element in our fight against climate change is that we are doing it both through our own efforts and through our product, copper, which is critical for decarbonizing the global economy.
Alisher B. Usmanov, Founder, USM
The views expressed in this article are those of the author
