Miner Anglo American Plc clinched hundreds of permits this month to explore for copper in a remote part of northern Brazil, Brazilian authorities said, as the growing electric vehicle market and a scarcity of shovel-ready mining projects fuels demand for the metal.
A major copper find, if confirmed, would cheer the mining industry which is eyeing a looming shortfall for the red metal, prized as an electricity conductor, after years of shrunken exploration budgets meant little in the way of promising new discoveries.
In a statement to Reuters on Thursday, Anglo said it was too soon to make claims about the viability of the project. But the company confirmed it had received permission to explore for copper in Brazil’s Mato Grosso and Para states where it had not yet begun studies.
The project on the edge of the Brazilian Amazon, an open secret among Brazilian geologists but not previously reported by Anglo, could also be a major boon for copper mining in the country, which lags far behind the world’s top producer Chile and has been hit by a series of headline-grabbing mining accidents.
But the remote location of the 284 blocks, which cover nearly 1.9 million hectares (4.7 million acres), poses myriad challenges, such as the specter of a showdown with activists, just months after they forced the government to walk back plans to open a reserve to mining.
“There could be (resistance), but it would be perfectly manageable,” Marcos Andre Goncalves, the chief of Chilean miner Codelco in Brazil and a director of mining companies association ADIMB, said on Friday. He added that a big copper find “would clear some of the fog away” from the industry.
What Anglo appears to have found in the Alta Floresta Gold Province, experts say, is a porphyry style copper-gold deposit, geology typical of Andean mines and responsible for upward of 60 percent of the world’s copper resources. In Brazil, there is just one example of a mine in operation with such geology, the Chapada deposit in Goias state.
“The (mineral) content is similar to that of Chile,” said Victor Bicca, director general of mining regulator DNPM, adding that it could be a “mega deposit.”
“Obviously it will be in the interest of the government to make it happen in as little time as possible, because the world is demanding copper,” he added.
In a May report, Bank of America said the copper mine project pipeline has shrunk dramatically since 2011 as copper prices cratered and exploration has been increasingly less successful.
Even if the Alta Floresta Gold Province yields as much copper as hoped, that does not mean Brazil is on the path to becoming another Chile, with annual copper production of 5.33 million tonnes, thanks in part to BHP Billiton Plc’s Escondida, the world’s biggest copper mine.
“The chances of this being another Escondida are really small,” said Vancouver-based mining consultant Mike Doggett. Still, the find “is generating excitement and that is good.”
Only one-fifth of all copper discoveries turn into mines in 20 years, according to Richard Schodde, managing director of exploration adviser MinEx Consulting.
Schodde said that porphyry deposits tend to be much larger in size, but lower-grade and economically feasible only if they are close to the surface or have good infrastructure nearby.
London-based Anglo said it began exploring 9,000 hectares nearby two years ago, through a partnership with privately owned local miner Mineradora Ouro Paz SA, adding that two drill rigs are in use there.
It took the miner almost a year to receive the exploration permits and it will likely soon need to seek environmental permits to extract minerals for analysis.
Anglo Chief Executive Mark Cutifani reiterated the company’s commitment to the base metal.
“We like the commodity, we like our assets, and we like the potential within the business,” he said at a Miami conference last month. “We’ve got significant growth options inside the portfolio and also outside the existing operations,” he added.