One tonne of copper brings to life 40 cars, electrifies 100,000 mobile phones, powers 400 computers and lights up around 30 homes.
As an exceptional conductor, copper is a force behind the power grids that energise national economies and is crucial in reducing carbon emissions. It’s a cost-effective material that’s vital across an array of industries.
Copper is also highly malleable and ductile, rendering it suitable for infrastructure including electrical grids, buildings, and pipes.
What this means is copper is playing a vital role in the clean energy future, being integral to wind farms, solar energy, energy storage, and electric vehicles.
In 2021, Goldman Sachs analysts determined that there is no decarbonisation without copper.
“As we have long argued, moving the global economy toward net zero emissions remains a core driver of the structural bull market in commodities demand, in which green metals – copper in particular – are critical,” analysts stated.
The demand is growing – and growing rapidly, but where will future supply be drawn from?
Traditionally, copper has been mined in South America, China, the US, Australia and some African nations. Today, we are seeing the development of copper mining in the Middle East, with countries like Oman paving the way.
Emerging copper suppliers
ASX-listed and Oman-based copper explorer Alara Resources (AUQ) is one such explorer tapping into the mineral-rich regions of Oman. The company is behind multiple successful exploration projects in Oman and Saudi Arabia. It’s now on its way to becoming a copper-concentrate producer.
Alara Resources’ Managing Director, AV Sthapak, expressed that Oman has become a home away from home for the company.
“The company’s relationship with the Sultanate has built over the last twelve years on a solid basis of technical expertise, commitment, trust, and transparency,” he said.
In recent years, the Sultanate of Oman – the second-largest country in the region behind Saudi Arabia – has seen increasing interest in mining, with significant investment from companies such as Alara.
In fact, the nation holds substantial exploration potential not only of copper, but also of gold, silver, chromite, lead, nickel, manganese, and zinc mineralisation. A large amount of areas in this country still remain unexplored.
“The Sultanate of Oman has the capacity to attract investments in the development of its mining and associated industrial sector due to its unique geography and geology, as well as high-quality infrastructure, competitive energy costs, and stable governance,” Mr Sthapak said.
In October 2022, Oman declared its commitment to achieving Net Zero emissions by 2050, in line with the Paris Agreement. The government committed to scaling up clean energy production, with renewable energy playing a pivotal role. Oman plans to leverage its abundant natural resources towards renewables like solar and wind energy, along with its geothermal and tidal energy potential.
Supporting this goal, Oman’s new Foreign Capital Investment Law (FCIL) came into effect in January 2020, simplifying foreign investment in mining in the Sultanate.
This has made it not only possible but also highly lucrative for mining companies, including Alara, to operate in the region and kick-start projects that can significantly contribute to the surging demand for copper.
Alara’s mission
The company’s mission revolves around achieving maximum shareholder value through profitable growth driven by sustainable and cost-effective operations.
Alara’s noteworthy projects include Washihi-Majaza, Mullaq, Al Ajal and Daris copper-gold projects in the Semail Ophiolite belt of Northern Oman, extending more than 800 kilometres across tenements highly prospective for Cyprus-type Volcanogenic Massive Sulphide (VMS) copper-gold deposits.
Alara’s previous exploration programs have identified the potential for copper and gold mineralisation across all four of its licensed areas: Al Ajal, Washihi-Majaza, Mullaq as well as Daris.
The strategic location of the projects, coupled with the positive historical data, indicates that these projects hold the potential to emerge as a significant contributor to the copper supply demand in the future.
The current mineral resource estimate (MRE) of Washihi-Majaza stands at 12.39 million tonnes (Mt) of indicated resources at 0.89 per cent copper and 0.22 grams per tonne of gold, along with inferred resources of 3.71Mt at 0.79 per cent copper and 0.23 grams per tonne of gold.
Alara is firm in its belief that substantial, undiscovered copper-gold mineralisation exists even beyond the known reserves and resource estimates.
The company is actively advancing the Washihi-Majaza project, with ongoing construction of copper-concentrate production facilities to enable on-site processing. Alara is also actively pursuing grant of mining licenses for other projects in the country.
“Alara’s flagship Al-Washihi-Majaza copper mine, located in a developing region of the country, is establishing new precedents for sustainable mining and processing in the country,” Mr Sthapak commented, also adding, “Local communities and stakeholders support the project, which will lead to greater, more sustainable, and mutually beneficial growth in the area.”
Copper demand
S&P Global Market Intelligence predicts global copper demand to nearly double from 25 million to about 50 million tonnes by 2035. However, continuing at its current annual rate of a humble three per cent, global production is only estimated to reach 31 million tonnes by 2035 – falling well short of the 50 million tonnes required to meet future demand.
This presents new copper producers with an opportunity to drive growth in the copper mining sector, maximising shareholder returns while fulfilling the rising industry demand.
Wood Mackenzie correctly stated in its research released in October 2022 – that meeting ambitious Net Zero targets would require the mining industry to undertake projects at an unprecedented rate while maintaining consistent financing.
The report showed that 9.7 million tonnes of mine supply would be required over the next decade from projects that haven’t yet been approved.
The Wood Mackenzie report also acknowledged that, to date, a shortfall of this magnitude has never been achieved within a decade.
What this encourages is greater project sanctioning, with more projects required than ever to be progressed through the pipeline and quickly, or there will simply not be enough copper to accommodate demand.
Along with this, more than US$23 billion (A$36 billion) of investment would be needed each year for new projects, marking a 64 per cent increase from the average spend over the past 30 years.
The report also forecasts a copper price rally to exceed US$11,000 (A$17,250) per tonne within five years. At the moment, copper is trading at around US$3.60 (A$5.64) per pound as it is typically sold (one pound equates to .45kg).
Diverse applications of copper
As of August 2023, the US Department of Energy (DOE) officially added copper to its critical materials list, following the lead of the EU, Japan, India, China, and Canada, and underscoring the significance of copper in energy transition technology.
Copper is indispensable to electric vehicle (EV) technology – being included in the batteries that power them as well as in the manufacture of the cars themselves.
According to the Copper Alliance, conventional cars contain around 18-48 pounds (8-22 kilograms) of copper, while hybrid EVs contain roughly 88 pounds (40kg), and battery electric vehicles contain 183 pounds (83kg).
With 40 million EVs set to be on the roads by 2030, this can only be a major driver of copper demand next few years.
Per Wood Mackenzie, for the world to align with the Paris Agreement, plug-in EV passenger cars will need to account for at least 35 per cent of total vehicle sales by 2025, rising to 70 per cent in the subsequent decade. This is a significant increase when compared to less than nine per cent presence in 2021.
With the demand for EVs growing globally, the world’s major car brands are transitioning their manufacturing portfolios to accommodate the future demand. BMW is aiming to have 50 per cent of its global sales to be electric by 2030, with 10 million BMW EVs on the road globally by 2033. Audi aims to be all-electric by 2033, everywhere except China. Ford hopes 40-50 per cent of its global car sales to be electric by 2030, while Jeep is aiming for 100 per cent EV sales across Europe by 2030.
This shift being undertaken by key car manufacturers toward a sustainable future translates into a call for higher copper production.
Along with EV manufacturing, the metal also finds utility in industries such as defence – both navy and military equipment, consumer electronics, healthcare and currency.
Investor takeaway
Bolstered by a capable and experienced board, Alara Resources is well-positioned to contribute to – and benefit from – Oman’s desire to prioritise green energy.
The company is spearheaded by Managing Director Atmavireshwar Sthapak, a geologist specialising in mineral resource exploration and evaluation studies.
Recent company news has revealed that Alara is on the cusp of completing the construction of a one million tonnes per annum (Mtpa) copper concentrator plant at its Al Washihi-Majaza project in Oman.
To this end, the company has already secured an offtake agreement.
Simultaneously, Alara has its sights on an exploration auction round facilitated by the Oman Ministry of Energy and Minerals, aiming to acquire new blocks with high base metal prospects.
Alara Resources is primed to capitalise on the right metal, in the right place, and at the right time. As the multi-nation drive towards electrification, renewable energy, and digital infrastructure propels copper demand, Alara Resources stands as a beacon of promise within this dynamic landscape.
“Successful explorers, developers and producers of copper are set to become an important element of more astute investor portfolios,” Mr Sthapak said, “Amidst all this change, the company continues to grow from strength to strength and is committed to its endeavours in Oman.”