Cyprus can benefit from soaring copper prices

Cyprus can take advantage of soaring copper prices, the result of pronounced shortages across the world, helping to increase supply through new projects on the island, according to Mark Rachovides, the President of Euromines and Chairman of Venus Minerals.

The seasoned mining industry professional noted that copper prices have soared over the past few months due to a supply crunch, with analysts suggesting that global shortages are likely to continue to affect the market throughout the decade.

Numerous factors have contributed to the shortage in copper supply. These include increased demand, primarily driven by the reopening of China following the lifting of restrictive measures, efforts to transition to a greener economy, as well as increasingly challenging supply streams in South America.

Rachovides said that although initially resilient, Peru’s copper mines were hit hard by protests last month, affecting exports to copper-intensive economies. It should be noted that the South American nation is the world’s second-largest copper producer, accounting for 10 per cent of the world’s copper supply.

“Beyond political instability, however, there is also the issue of declining grades, whose effects are already evident in Chile, the world’s largest copper producer, accounting for 27 per cent of the global supply,” Rachovides said.

“The country recorded a drop in copper output due to lacklustre ore grades – reporting a year-on-year decline of 7 per cent in November – with analysts at Goldman Sachs estimating that it will likely produce less copper within the next two years,” he added.

Rachovides elaborated further by saying that “at the same time, the global economy cannot rely on new mines, since taking a new mine online in hard-to-reach but copper-abundant areas, would take a long time”.

Against this backdrop, copper is expected to take on a bigger role over the next decade, putting a further strain on the current shortage.

Rachovides cited analysts at Wood Mackenzie who have gone so far as to say that the current shortage could last until 2030, reinforcing the need for additional sources for the sought-after mineral.

What is more, according to the manager of the BNY Mellon Natural Resources fund, Al Chu, copper is set to undergo a “generational shift” in demand as decarbonisation efforts continue to increase.

“Copper is typically used as a construction metal for wiring in buildings, wiring for machinery and whatnot, but if we look at the decarbonisation net zero energy transition trend, copper is the new oil,” the analyst stated.

Additionally, Chu went on to say that demand from renewables will result in a “multiyear tsunami of demand”, which means the metal’s price is bound to increase further.

Rachovides explained that in this framework, Cyprus can take on a role in the global copper supply chain by promoting and facilitating new projects in the raw materials sector.

“Boasting significant untapped copper resources, the island could benefit from the global surge in copper prices, leading to new jobs and services as well as additional state revenue,” Rachovides said.

“Cyprus-based mining and exploration companies, which use modern mining and mineral processing methods that minimise the environmental impact, are prepared to recover important metals from mining waste created decades ago, which have accumulated in tailing ponds and dumps across the island,” he added.

Rachovides recalled that Venus Minerals specifically, has made a promising discovery in Kokkinoyia, which indicates an estimated combined resource inventory of 9.5 million tonnes at 0.65 per cent of copper.

“As such, amid the increasing global demand for copper, I believe that Cyprus is presented with a huge opportunity,” Rachovides said.

“Unlocking the island’s untapped copper reserves will not only add value to the Cyprus economy, due to the expected price surge and the diversification of our economy, but it will also help eradicate environmental hazards from mining waste and recultivate the land.”