Australian Copper Industry Embarks on a New Era Prioritizing Scale

The phrase "grade is king" has long been synonymous with Australian copper deposits, highlighting a longstanding perspective within the industry. Despite Australia's robust reputation in the metals market—especially with iron ore, gold, and lithium—its position in copper production remains modest compared to global leaders such as Chile and Peru. 

Historically, successful domestic copper operations have predominantly stemmed from high-grade volcanogenic massive sulfide (VMS) deposits. Examples include Sandfire Resources’ (ASX:SFR) DeGrussa, 29Metals’ (ASX:29M) Golden Grove, and Metals Acquisition’s (ASX:MAC) CSA mine in Cobar. Additionally, iron-oxide copper-gold deposits, such as BHP’s (ASX:BHP) substantial Copper South Australia assets and Evolution Mining’s (ASX:EVN) Ernest Henry in Queensland, have contributed to the landscape. 

However, Sandfire’s DeGrussa serves as a compelling case study illustrating the challenges associated with high-grade copper mines. Discovered in a blind drill hole in 2009 and operational by 2012, DeGrussa boasted impressive grades exceeding 5% copper, proving highly profitable for over a decade. Yet, the mine's relatively short lifespan necessitated continuous exploration success to sustain operations, leading to dependency on nearby deposits or extensions of the current resource. 

Despite its success, DeGrussa faced inevitable challenges. The exploration team managed to identify only one short-lived addition, Monty, and as the mine approached the end of its operational life, less effective exploratory methods were employed in hopes of replicating previous successes. The solar power plant, installed as a pioneering initiative in 2016, was decommissioned just eight years later due to operational challenges. 

In contrast, the majority of the world’s largest copper mines are characterized by porphyry deposits, which, while lower in grade—often around 0.2% copper—offer significant tonnage and long mine lives. These deposits typically yield resource growth that surpasses new discoveries, making them an attractive option for sustained production. The mining techniques employed, such as large open-pit operations or bulk underground methods like block caving, leverage economies of scale to offset lower grades. 

Over the past decade, the average grade of copper produced has dropped from 1.2% to 0.72%, with global reserve grades averaging around 0.4%. This decline is attributed to the aging of existing mines and challenges in locating new, high-grade resources. Notably, mines like Boliden’s Aitik in Sweden extract copper at grades below 0.2%. 

This shift towards prioritizing scale is also evident in mergers and acquisitions within the sector. For instance, BHP's C$4.1 billion acquisition of a stake in the Filo Del Sol and Josemaria joint ventures with Lundin Mining highlights a trend towards securing assets with lower grades but considerable long-term potential. 

In Australia, two of the leading copper producers exemplify this trend. Newmont Corporation’s acquisition of Newcrest predominantly aimed to secure the Cadia-Ridgeway mine, which, despite its gold production, stands as the country’s second-largest copper producer. With production numbers approaching 100,000 tonnes annually, Cadia's consistent output and expansive resources underscore its significance in Australia’s copper landscape. 

Meanwhile, Evolution Mining’s Northparkes mine continues to yield robust copper and gold outputs, with a projected production of approximately 23,000 to 27,000 tonnes of copper and 40,000 to 50,000 ounces of gold in FY25. This operation's 30-year mine life highlights the advantages of long-term resource stability. 

As demand for copper rises due to increasing needs in renewable energy technologies, electric vehicles, and urbanization, Australian producers face a landscape of challenges and opportunities. Market dynamics suggest a potential for copper prices to surge as global supply struggles to keep pace with burgeoning demand. 

Several companies are well-positioned to lead Australia’s next large-scale porphyry copper mines. For example, Alma Metals (ASX:ALM) is set to commence a scoping study on the Briggs deposit in Queensland, which has shown promising intersections of copper. Similarly, Alkane Resources (ASX:ALK) has made headlines with its discovery of the Boda porphyry and is pivoting from gold production to focus on copper development.  

Caravel Minerals (ASX:CVV), situated in Western Australia’s wheatbelt, holds considerable copper resources and is advancing through feasibility studies. Each of these companies exemplifies the shift towards prioritizing scale in an era where the demand for copper continues to grow. As the industry evolves, the focus on lower-grade, high-tonnage deposits appears increasingly vital for securing a stable copper supply for the future.