Copper Faces Risk Due to Proposed Reform

Copper could be the metal most affected by the proposal to ban open-pit mining, said Luis Humberto Vázquez, President, Association of Mining Engineers, Metallurgists, and Geologists of Mexico (AIMMGM). Changes could also impact the country's ranking as the ninth largest copper producer in the world. 

Vázquez stresses that copper is the sector that faces the greatest consequences with the new proposal, given that 80% of its production depends on open-pit mining, while the remaining 20% corresponds to underground mining. It underlines the strategic importance of copper, especially in light of electromobility trends, as electric vehicles demand up to 70% more copper than conventional cars. Consequently, if the reform is enacted, Mexico could find it difficult to meet the growing demand for copper in the long term. Vázquez further notes that other metals, such as silver, lead, and iron, would also be affected by the proposed reform.

The open-pit ban reform was proposed on Feb. 5 and aims to no longer grant concessions for open-pit mining projects due to the negative impact on the environment and the adverse health effects on communities living nearby. While the proposal has generated uncertainty, experts have asked the sector not to be alarmed, as the reform has not been voted on or debated. Experts stressed that they are confident that the new reform will be modified, as better understanding between the government and the sector arises. The upcoming debate on the new reform package is scheduled from Feb. 19 to April 15. 

What is Copper’s Potential?

Mexico currently ranks ninth worldwide in copper production. In 2022, Mexico produced 753,885t of copper, showing a 2% increase over 2021, CAMIMEX reported. Grupo México was the largest copper producer in Mexico with a 73.3% share, followed by Minera Frisco, Santa María de la Paz y Anexas, Capstone Copper, and Invecture Group. In Mexico, companies like Torex Gold, Sierra Metals and Grupo Mexico are increasingly expressing interest in copper projects, recognizing its growing importance in sustainable operations. 

Currently, more than 60 countries have set ambitious targets to triple global renewable energy capacity by 2030. Citibank estimates that these efforts will result in substantial growth in copper demand, reaching 4.2Mt. "Copper is truly perfect. It is essential to achieve a low-carbon world. I believe that the future of industry, society and our lives will largely depend on copper, as there is no other replacement for it. Perhaps silver could be an option, but it is more expensive. As a result, copper will be the metal to lead the world's green transition," Steve Roberston, CEO, Infinitum Copper, told MBN. 

While the demand for copper is on the rise, Warwick Smith, CEO, American Pacific Mining, warned that the world may face a copper crisis in over 10 years due to a potential shortage in supply. “If you want to be carbon neutral by 2050, you will have to take the amount of copper that has been produced since the beginning of time and triple it in the next 20 years or so. It is wild how much copper will be needed,” he added.