NIMBYS TO BANANAS
Speakers and delegates at the conference also lambasted the
blowout in the time taken for governments to approve new mines,
saying it is now a major obstacle in both developed countries
such as Australia and Canada, and increasingly so in more risky
jurisdictions in Africa and parts of Asia and South America.
It now takes an average of 23 years from discovery of a
copper resource to a producing mine, according to data shown at
the conference by Michael Langford, the executive director of
consultants Airguide.
Major copper discoveries have also plunged in recent years,
with data showing a slump from 15 in 2007 to just two since
2015.
And even if a miner does make a discovery, the battle then
becomes to secure official approvals and a social licence from
not only the local communities, but also broad range of
environmental and traditional landowner groups.
People opposed to building new projects near where they live
or farm have been referred to as Nimbys, standing for Not in My
Backyard.
But a new term is coming up. Banana, which stands for Build
Absolutely Nothing Anywhere Near Anybody.
For the mining industry, a Banana is far worse than a Nimby
as the opposition is against any project being built, no matter
where it is and what impact it may or may not have on the
environment or the community.
The industry view is that many of the people demanding an
energy transition the loudest are the very same people working
hardest to make it virtually impossible to produce the necessary
metals.
The question then becomes how do these issues get resolved?
Governments could work to speed up approvals once they
recognise the need for expanded mineral production, but history
suggests government action really only happens when the point of
crisis is already reached.
The mining industry can get better at messaging and trying
to win a public relations battle it has largely lost, but again
this is a hard mountain to climb and the industry is fractured
and lacks convincing voices.
This leaves the price signal as the best bet, but the
problem with this is that by the time prices rise high enough to
incentivise new production and speed up developments times, it's
already too late.
The opinions expressed here are those of the author, a columnist
for Reuters.
(Editing by Simon Cameron-Moore)
(The opinions expressed here are those of the author, a
columnist for Reuters.)
By Clyde Russell
SINGAPORE, May 11 (Reuters) - If the global energy
transition is to be delivered in the coming decades, the mining
industry believes there is one certainty. They will need to
massively boost output of metals.
But they are also convinced that the current model for doing
this is largely broken, and miners will, even with the best of
intentions, struggle to produce enough copper and lithium and
other metals essential to ending the dominance of fossil fuels.
The old model of bringing mines to production was largely
driven by small, junior mining companies raising capital,
proving up a resource, and then raising more capital to move
through permitting and feasibility.
Finally, they would either raise more money to build a mine,
or be swallowed up by a larger miner with the resources to build
and operate a mine.
But junior miners and private equity investors at this
week's Mining Investment Asia conference in Singapore said that
this method of taking a resource to metal production is
increasingly difficult to achieve.
The junior miners struggle to attract experienced leaders
who can drive a process, and the larger miners are pulling back
from supporting the small players develop reserves.
There are several other issues that concern the industry.
The first is a lack of incentive pricing.
One thing most mining and energy transition analysts agree
on is that there is currently insufficient copper production to
meet anticipated demand as the world moves to electric vehicles
and renewable energy technologies.
If this is the case, the question is then why the future
price of copper is relatively flat relative to the current
price.
Benchmark London three-month contracts ended at
$8,475 a tonne on Wednesday. The price for the contract expiring
in August 2026 was $8,542.88.
This flat-as-a-pancake structure probably doesn't reflect
what the actual price is likely to be in coming years, but it is
the price that consultants and bankers will use when deciding
whether to finance a copper mining project.
The flat forward curve thus becomes an impediment to
securing financing and advancing any mining project.
Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.