(Kitco News) - After a disappointing 2023, the copper market should see a better new year as demand continues to outweigh dwindling supply, according to one mining executive.
In an interview with Kitco News, Warwick Smith, CEO of American Pacific Mining Corp, said that although gold has been attracting a lot of attention after hitting all-time highs, he expects copper to take more of the spotlight in the next few years as supply remains a significant issue.
However, he added that the company’s polymetallic focus means that they don’t have to pick one winner over another.
“Gold will always be an important metal for us, but I think copper is probably my favorite metal for the moment and probably will be for some time, just because of the amount of copper needed for this green revolution,” said Smith. “If there's going to be this green revolution, it's going to be led by copper.”
Smith said with the growing electrification trend, it's difficult to overstate how much copper will be needed to meet future demand.
“If you want to be carbon neutral by 2050, you will have to take the amount of copper that's been produced since the beginning of time and triple it in the next 20 years or so. It’s wild how much copper will be needed,” he said. “We're going to have a copper crisis in about ten years, and I think everybody knows; they just don't want to acknowledge it.”
So far, the company’s focus on base metals is paying off as it develops its Palmer project, an advanced-stage, high-grade volcanogenic massive sulphide (VMS) deposit in Alaska. The company recently reported significant results from its 2023 drill program, showing high-grade copper mineralization.
“The final assay results from Palmer’s 2023 resource definition drilling have exceeded expectations with tremendous copper grades and aggregate metals values over significant widths,” said Peter Mercer, Senior Vice President, Advanced Projects, in a recent press release.
American Pacific is developing its Palmer VMS project in a joint-venture partnership with Dowa Metals & Mining, owner of Japan’s largest zinc smelter. Under the agreement, Dowa plans to spend $20 million in exploration at the Alaskan project.
Meanwhile, the company continues to work with Rio Tinto to develop its flagship Madison property, a copper-gold project in Montana. Rio Tinto is looking to spend $30 million on exploration.
Another major priority is America Pacific’s Ziggurat Project, a gold and silver play in Nevada. Under a joint venture agreement, the exploration costs will be covered by Centerra Gold Inc.
While the mining sector struggled through 2023 as lukewarm commodity prices kept investors away, Smith noted that American Pacific has been largely immune to market conditions because of its major partnerships.
He noted that the company expected to spend $36 million on exploration and development in 2023.
“We’ve got great partners that have helped us move our projects forward,” he said. “I wouldn't want to be in the position where you were in desperate need of cash right now, because it's tough out there.”
As to what will bring investor capital back, Smith said that he sees the market improving as commodity prices rise. He added that higher prices will take some risk out of the market, making junior exploration companies more attractive.
Another factor that could drive investors into the market is increased mergers and acquisitions. Smith said he expects solid M&A activity over the next couple of years.
“There are a lot of companies that have nice projects, but they have no money to drill them or evaluate them and they are ripe for buying, especially if the market stays a little bit cold,” he said.