Just how big could copper production in South Africa’s Northern Cape become? Pretty substantial, according to two local developers of the mineral who believe the province could even recapture its glory days of the Seventies.
“We believe that in the long term we can get our set of properties at Okiep back to their historic production levels of around 30 000t/year of copper metal,” says Orion Minerals CEO Errol Smart. “In total the Okiep area produced up to 60 000t/year of copper and I believe between Jan (Nelson) and ourselves we can do that all over again … and possibly more.”
We believe that in the long term we can get our set of properties at Okiep back to their historic production levels – Errol Smart, Orion Minerals
Nelson, who is CEO of Orion’s rival in the Northern Cape, Copper 360, says his company has “a clear plan” to produce 50 000 tons – production that will be funded “mostly” from cash flow. “But, and I don’t want to get ahead of myself, there are other projects we are looking at which show us we could eventually get to 100 000t,” he says of future annual production.
Looking even further ahead at the long-term future of the Northern Cape, Nelson says there are still big pieces of the copper-bearing region around the areas controlled by Copper 360 and Orion extending up into Namibia. Bringing in new participants would depend on South Africa presenting itself as an attractive destination in which to do business – something it had failed badly to do so far.
Smart reckons that just might be happening following the outcome of the latest elections, which he described as an unexpected black swan event. Orion has been “inundated” with queries since the formation of the GNU (Government of National Unity) with people who previously were “not prepared to write cheques” now apparently prepared to take another look at investments in South Africa.
Copper 360 is the most advanced of the two companies with a couple of producing plants in operation near Nababeep as of June, and a third due to kick in from August.
Orion Minerals is at least 18 months behind with its projects around Nababeep as well as starting the production of copper concentrate at its Prieska project as it still has to build the concentrator plants. While mining shallow surface ore block and mine pillars at Prieska is under way, dewatering the mine could take three years at least before Orion accesses the deep-level ore zones.
“Prieska is fully permitted, mining is under way and we are stockpiling ore on surface. The first three years of ore production at Prieska runs at an average grade of 2.4% while the average at Okiep is going to be 1.4%,” says Smart.
In April, Smart disclosed a series of drill results from its Flat Mine project at Okiep which included a “standout intercept” of 49m at 4.89% copper from 231m down hole including 10.23m at 12.47% copper. He described that as “one of the highest-grade intercepts reported in South Africa for the last 40 years”. “For me as a geologist this underscores the huge potential of Orion’s 641 square kilometres of mineral right holdings which contain literally hundreds of mapped, outcropping mineralised bodies.”
A scoping study for Okiep was “looking at” production of around 9 000t/year, but further details were dependent on completion of the bankable feasibility study and its validation by independent experts, Smart says.
Minnows with giant promise
Copper 360’s creation is thanks mainly to the pioneering efforts of Northern Cape mining entrepreneur Shirley Hayes, who was born in Springbok, which with a population last measured at 12 000 is described as the capital of Namaqualand. Hayes has been exploring the region since 2008 when she acquired the exploration right for the former Concordia mine.
Hayes then teamed up with Nelson, formerly CEO of Pan African Resources. He was separately building an SX/EW plant to produce copper cathode from dump material at the former Okiep mine. The two eventually put together Copper 360 which listed on the JSE in April last year.
The past year has been traumatic for the duo as Copper 360 battled with a string of issues, including load shedding, which lowered plant performance and problems with recovery and crushing, causing a three-month shutdown and mill failure.
Now, however, Nelson is confident the worst is behind the company. He has forecast production of between 6 500t and 10 000t of copper for the current year to end-February compared with just 313.5t in the previous year. “As of August we will have three production plants and three mining sites in operation which gives us great flexibility and security,” he says.
And – in the first indication of what could lie ahead in future major expansions in the region – DRDGOLD is assessing the possibility of setting up a copper recovery operation to treat the 60mt of dump material that Copper 360 controls.
All of this is taking place at a critical period in the copper market where Nelson sums up Copper 360’s situation as being that “our timing could not be more perfect to deliver copper production in a rising copper demand and price environment”.
For the past 10 years the “prophet” of the coming copper boom has been billionaire mining entrepreneur Robert Friedland, whose Ivanhoe Mines group has developed the huge Kamoa-Kakula copper complex in the Democratic Republic of the Congo.
The global push towards clean electrical energy, coupled with protectionist moves by countries looking to secure vital materials, is driving an unprecedented surge in copper demand – Paul Wong, Sprott
Friedland’s message has consistently been that the world needs more copper than ever to implement the renewable energy transition while the traditional major sources of that copper – the huge mines in South America – face falling output because of their age and dropping ore grades.
That is now being borne out with a string of production cuts announced by Anglo American from its South American operations and dramatically underscored by this year’s – so far – unsuccessful bid by BHP to take over Anglo American. The driving motivation for that offer was that BHP wants to get hold of Anglo’s copper mines to merge with its own.
According to Sprott market strategist Paul Wong, a new copper supercycle is emerging. He cites rising geopolitical and market trends as factors. “The global push towards clean electrical energy, coupled with protectionist moves by countries looking to secure vital materials, is driving an unprecedented surge in copper demand,” says Wong.
“At the same time copper supply is constrained following years of underdevelopment, expanding protectionist policy measures and a continued preference among copper producers to grow by mergers and acquisitions rather than greenfield development.”