Copper Porphyries: Are They the Key to the Electric Vehicle Boom?

Porphyry deposits are the world’s most important source of copper available today. In fact, copper porphyry deposits are responsible for 60 percent of global copper production, 20 percent of the world’s gold production and nearly all molybdenum production.

Such deposits range in size from tens of millions to more than 1 billion metric tons of ore. In the time of a fast-growing electric vehicle (EV) industry, copper remains one of the most critical components of both the electrification and clean energy supply chains. Experts predict that copper porphyry deposits will play a significant role in the race to keep up with EV demand.

Porphyry deposits, otherwise known as porphyries, are extensive polymetallic systems that house copper, molybdenum, gold, silver and a range of other industrial or precious metals. Porphyries are most commonly found along the west coast of North and South America, and the deposits are formed in tectonic plate convergent zones, which are the ideal host for mineralization.

Each porphyry is unique and offers varying concentrations of minerals. For example, some deposits may host high concentrations of gold versus copper and would be considered gold porphyries. Copper porphyry deposits typically range between 0.2 percent to greater than 1 percent copper, with a median grade of 0.44 percent.

While grade is one of the most important factors to consider when evaluating a mine’s potential profitability, despite their low to medium grades, copper porphyries remain highly competitive among major producers due to a number of reasons, namely their enormous size, district-scale potential, extended mine life and low-cost operations. Copper porphyries often outlive market cycles due to their decades-long mine life. Moreover, metallurgical properties contribute to lower cost mining operations involving large-scale flotation methods, heap leaching and electrowinning processes.

While copper mineralization can occur in a range of geological settings, historically the world’s most prolific copper mines have been large-scale porphyry deposits. For major producers in the industry, porphyries are often a world-class copper resource whose value far exceeds the cost of mining or processing. For example, Rio Tinto’s (ASX:RIO) Bingham Canyon mine in Utah has been in production since 1996 and each year produces roughly 300,000 tons of copper, 400,000 ounces of gold, 4 million ounces of silver and 30 million pounds of molybdenum.

Keeping up with the demand for electric vehicles

According to a forecast by Deloitte, the EV industry is expected to grow at a compound annual growth rate (CAGR) of 29 percent over the next decade, reaching 31.1 million EV sales by 2030. In comparison to traditional internal combustion engine (ICE) vehicles, plug-in EVs require up to 10 times more copper per vehicle. Experts from Wood Mackenzie believe that more than 20 million EV charging stations will be required by 2030, which will require 250 percent more copper in comparison to 2019. In North Americ, the market for EV infrastructure is expected to top US$18.6 billion by 2030.

The average gasoline-powered car contains 20 kilograms of copper, a hybrid EV relies on 40 kilograms of copper, while a fully electric model needs roughly 80 kilograms of the metal. Of course, as the size of the vehicle increases, so too does the amount of copper it requires. For instance, electric buses call for 11 to 16 times more copper than your run-of-the-mill ICE passenger vehicle.

Experts estimate that the demand for copper will increase by anywhere between three and five million tonnes over the next decade. Once EVs become mainstream, that demand is expected to reach 11 million tonnes, and that’s not even including other clean technologies that require copious amounts of copper. While aluminum is the closest alternative to copper, an aluminum cable would need to have double the cross-sectional area to conduct the same amount of electricity.

At the moment, less than 1 percent of the world’s vehicles are electric. However, with leading manufacturers like Ford (NYSE:F) and General Motors (NYSE:GM) having released or planning to release electric versions of their flagship vehicles, it is clear that industry giants are following consumers in their transition away from the gasoline-powered internal combustion engine and toward the more sustainable technologies. The rise of the EV market is also shown in the unprecedented growth of companies like Tesla (NASDAQ:TSLA), which saw more than a 600 percent increase in its stock in 2020.

Major copper porphyry districts

Porphyry deposits are concentrated in the Southwest Pacific as well as the orogenic belts across the west coast of North and South America. The most well-known example of a copper porphyry hotspot is Chile, the world’s leading copper producer. Globally, the largest copper mine is BHP-Billiton’s (ASX:BHP) and Rio Tinto’s Escondida mine, which has been in production since the late 1990s. The mine, which is based on a copper porphyry deposit located in the Atacama Desert in northern Chile, accounts for a whopping 5 percent of the world’s total copper output.

The US is the largest producer of copper in North America, and the fifth largest by global standards. The majority of copper production in the US takes place in Arizona. Barksdale Resources (TSXV:BRO,OTCQX:BRKCF) is a Canadian exploration company focused on highly prospective copper properties throughout the US and Mexico, and its Sunnyside, San Antonio and Four Metals porphyry projects are located in the historic Patagonia district of southern Arizona. By targeting the world’s most prolific copper porphyry districts, companies like Barksdale Resources, BHP-Billiton and Rio Tinto are well-positioned to capitalize on the rapidly-evolving EV industry.

Takeaway

As automotive giants debut new products and governments around the world introduce emission-free incentives, experts point to an EV industry that is poised for rapid growth. Copper is a key element for the electrification supply chain — as well as for green technologies and renewable energies as a whole. Companies targeting the world’s largest copper porphyry deposits are well-positioned to capitalize on a large-scale transition toward cleaner, more forward-thinking technologies.

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