Copper is used in solar panels, wind turbines, and power lines, but the rising demand from the green energy boom will grow much faster than supply, according to BloombergNEF, a research firm. While copper is essential to today’s economy, it will be even more so in the coming years. Solar modules that generate electrons, transmission lines carrying electricity to consumers in their homes, and even the wiring within those homes that deliver power to phones and appliances are made of copper. Elevators, electric bicycles, wind turbines, EV charging stations, and so many parts of the infrastructure that supports our modern way of life are also made of copper.
Manufacturing and installing solar panels, wind turbines, and power lines will require ever-more-expensive copper, while the demand for electric vehicles and other green technologies will only increase. To meet this demand, the world’s supply of copper will need to more than double by 2030. However, the world’s current supply of copper is only enough to meet the current demand for about five years or less.
Inventories are at record lows, and new mining projects are scarce. That makes current exploration more important than ever, putting pressure on companies to deliver results through drill programs. The Warintza Project, a high-grade copper exploration project has done just that, with four major discoveries so far by Solaris Resources (TSX:SLS) (OTCQB:SLSSF), the junior mining company that owns the project.
The company has already defined a 1.5Bt inventory in an open pit with a low strip ratio at the Warintza Central deposit, and within that a high-grade starter pit driving really robust economics. Warintza Central is one of four discoveries made within the Warintza porphyry cluster representing multiple times growth potential beyond the initial 1.5 Bt mineral resource.
Four major discoveries at a project that has been called a potential “super pit” have the market excited. In addition, Solaris management are the largest buyers of the company and have purchased over $188 million worth of stock, leading all issuers in the TSX materials sector. Most recently, the Executive Chairman, Richard Warke, exercised warrants at a 37% premium to market for proceeds of $15.5 million.
Insider commitment to the company and major discoveries have made Warintza a rare project with a lot of potential in a market that is calling out for new discoveries. Due to the urgent nature of the mining industry coping with supply issues, major mining companies have also stepped up their M&A in the past couple of years. This is expected to continue in the coming years and accelerate even while prices rise.
Inventories on the LME have hit record lows, which is driving up copper prices. The clean energy boom has increased the demand for copper, while the available supply has decreased.
Beyond the market dynamics of increasing output, there is a real risk that the copper shortage could slow a transition to green energy that many countries are counting on to reduce global warming. Copper is essential to making solar panels, wind turbines, and electric vehicles work. If the copper shortage stalls the green energy boom, it could have a significant impact on the environment, economy, and public health.
It could also have national security implications, as many countries are counting on the green energy boom to reduce carbon emissions and improve energy security. Europe has begun to move quickly toward renewables in the face of a natural gas and oil crunch, and North America has begun to move ahead with many of the pledges made in the past at the United Nations Climate Summit. The global transition to clean energy is being driven in large part by copper, but the copper shortage could stall that transition.
It will be up to companies like Solaris Resources and new high-grade projects like Warintza to help boost supply to even have a hope of meeting the demand that the market is clamouring for.
