PHOENIX — Copper prices are dragging today, but executives with London-based Rio Tinto have full confidence that the world will need more of the red metal by the time the Resolution Copper Project near Superior opens in several years.
The metal has been trading near the $2-a-pound range because of weak demand, particularly from China, which has been using almost half the global supply amid its development.
But the Resolution Mine near Superior won’t be producing copper for a decade or so, depending on permitting and preparation work to access the ore body that lies more than a mile below the surface. As recently as 2011, the metal was trading for more than $4 a pound.
Rio Tinto, which owns 55 percent of the project in a partnership with BHP Copper Inc., anticipates a significant supply crunch globally by the time the mine is in production.
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“What is happening in the market yesterday, today, tomorrow is not relevant,†said Jean-Sébastien Jacques, CEO of Rio Tinto’s copper and gold group, during a recent stop in Phoenix. “We are very bullish on copper. We believe it is the right commodity and the right property.â€
Jacques acknowledged the current market weakness and oversupply that is leading some mines to close. Just days after his visit, in fact, Phoenix-based Freeport-McMoRan Inc. announced it would close its Sierrita copper and molybdenum mine in Green Valley that earlier this year employed 1,300 ÃÛèÖÖ±²¥ns before the cuts began.
In the next decade, however, Jacques said the global supply will be tight. The world’s large open-pit mines are digging deeper and into lower-grade ores. New mines will be needed to make up the difference in the amount of copper produced to meet global demand, he said.
“There are ups and downs,†he said. “We want to invest in projects that are low-cost so that when the market is at the bottom, you are still making money.â€
The supply trend also requires mining companies to increase their use of automated equipment to safely reach deposits that lie far beneath the surface, as is the case for the Resolution Copper Project.
“As we exhaust the nice, high-grade deposits at the surface, we need this new technology,†said Craig Stegman, chief growth and innovation officer for Rio Tinto’s copper and coal group.
“Technology is an enabler,†he said.
Jacques said that using automated equipment, as the Resolution project is likely to do, simply makes the working environment safer. It doesn’t do much to reduce the number of employees needed because someone still needs to run the automated equipment remotely.
He said the company’s use of automation also saves on travel to remote mining locations around the world.
“We still have the same number of people, but if you have the option of living in the (Australian) outback or living in Perth, many people prefer Perth,†Jacques said.
Some of the automated technology Rio Tinto is using today and is likely to use in the Resolution Copper Project was developed in ÃÛèÖÖ±²¥ by Komatsu, he said.
The Resolution Copper Project faced years of delay because a portion of the ore body lies below a parcel of federally protected land.
But Congress passed, and President Obama signed in December 2014, a piece of legislation that will transfer the nearby Oak Flat campground land to Resolution.
The company agreed to transfer multiple pieces of private land to the federal government in exchange.
The mine remains controversial, with many members of the San Carlos Apache tribe protesting its development on the grounds that Oak Flat is a sacred site.
