The Race for Copper Hots Up

One unintended victim may be one of the biggest mining projects in British history

Photo by omid roshan on Unsplash

One of the purposes of Material World, aside from being a sort of duffer’s guide to the six substances featured, was to help provide some context to the fast-changing world we’re living in. For all sorts of reasons - the fracturing of globalisation, the growing enthusiasm among western leaders for industrial strategy, the race towards net zero - these materials matter more and more. Understand their history and their present day usage and you have a better chance of understanding how we may use them in future.

And the point of this occasional blog/newsletter was to provide a little context to the book and to be a place where I could update those of you who have read the book with news relevant to the book. The problem, which I suppose is a good one, is that there has been so much news relevant to the Material World. It has been hard to keep up.

For instance, consider the big story in the world of mining right now: BHP’s £31 billion attempt to take over Anglo American. Here what looks like just another M&A story is actually a story about some of the biggest themes of the modern world.

To start with, this is all about copper. BHP has made no secret that the main things it wants from Anglo’s portfolio are its copper mines. And there’s a clear logic to this. Whereas much of the money to be made in mining in decades gone by was in the production of iron, in future there is going to be an enormous demand for copper.

And, as you’ll know if you’ve read the book, one of the great problems facing us is that as time has gone on, most of the “easy” copper resources have been exploited. The average grades of copper found in mines has gone down from over 5 per cent down to below 1 per cent. Meanwhile, the mines have got deeper and deeper, and miners have had to devise ever more clever ways of extracting metal from rock (much more on all this in chapter 11 of MW).

So the supply side of things is challenging. But then there’s the demand side. Copper is perhaps the single most important metal in the energy transition. As I wrote in the conclusion of the book, “On the basis of one calculation, we will need to mine more copper in the next 22 years than we have in the entirety of the past 5,000 years of human history.”

This is one of those mind-bending nuggets that becomes even more mind-bending when you think about what copper mines actually are - vast holes in the ground. The biggest holes we, as a species, have made. Then ponder a further trio of issues: a) those who live near copper mines are getting ever more wary of approving them, b) there is a worrying lack of future mines planned and c) there is an even more worrying lack of enthusiasm among the younger generation to train as the mining engineers and scientists who might be able to deliver us all this copper. Argh!

Chart by Django Davidson at Hosking Partners

All of which is to say: yes one can well understand why BHP is so excited about copper. By the way, the history of the Material World also explains why BHP, with its market cap of $255bn, is enormous enough to gobble up little $24bn or so Anglo American. It mostly comes down to the fact that BHP bet big on iron ore and rode that wave whereby China urbanised and mechanised and began to consume enormous quantities of Pilbara iron (see chapter 9).

But there’s another little side story connected with this takeover which might be worth mentioning, and it comes back to a place we visited in the postscript to the salt section. There we visited the Boubly polyhalite mine in North Yorkshire and had a brief trip to the Woodsmith mine Anglo American are building nearby.

Anglo is putting billions into Woodsmith and it’s a very big deal in a few respects. It’s big for the local region, one of the most deprived in the country. It’s big for the UK as a mining nation - it’s been a long time since there’s been a proper, big new mine built in this country - and it’s big for a few other reasons too.

Polyhalite is an interesting product, an organic fertiliser that could help feed the world without damaging the soil as much as the current suite of chemical fertilisers. Plus, the mine, which is located within a national park, might well go down as the world’s greenest mine. Most of the machinery is going to be buried underground so you could drive by and not even realise it’s there. Oh, and there’s an enormous channel nearly as long as the Channel tunnel, devoted to taking the polyhalite off to the shipyards on the River Tees. I wrote a bit more about it all here.

The problem is this mine has long been regarded by investors as, well, a seriously risky bet. There’s no existing market for polyhalite (save for the relatively small customer base being built up by the neighbouring Boulby mine). The cost of the mine is significant. And up until Anglo bought the mine there had been serious questions about whether it would actually become operational.

All of which is to say, there’s a good chance that if this takeover happens the mine will be sold off and scrapped. In fact, there’s now a decent chance of that happening whatever the outcome here.

That would in one respect just be a continuation of one of the other themes that’s emerged in the months since I wrote the book. A striking number of the plants featured in MW are either mothballed or under existential threat. The blast furnaces at Port Talbot are on notice for closure this year, to be replaced with electric arc furnaces (more on this in due course). The CF Fertiliser plant at Billingham is no longer making ammonia. And now this. If you thought Britain was already about as deindustrialised as it could be… well, think again.