(Kitco News) – In 2025 primary copper supply will “start to fall off a cliff,” but the copper price isn’t high enough yet to incentivize new mine builds, says Nicole Adshead-Bell, chair of Hot Chili (TSXV:HCH).
In mid-November Adshead-Bell spoke at the 2023 Precious Metals Summit Zurich event.
“Six to $8 [a pound] for me is the price where you see corporations willing to take the risk to start investing in copper projects… Glencore’s CEO Gary Nagle earlier this year said we will not bring on new supply until the market is screaming for it, and the market will be screaming for it when the copper price is materially higher.”
Adshead-Bell was asked why the capital costs to bring on new copper projects is so high, with Kitco’s Paul Harris giving the recent example of Teck Resources adding $600 million to its budget for Quebrada Blanca Phase 2 project in Chile. She said two reasons are the high capex bill of large copper projects, and inflation. A third reason is mistakes at the executive level.
“Companies need to have post-mortems: ‘How did we get to have material blowout? Why didn’t we figure this was happening? Why didn’t we put mechanisms in place to try and control that earlier on?’,” she said.
Adshead-Bell’s Hot Chili is advancing its Costa Fuego copper project in northern Chile. The company completed a preliminary economic assessment earlier this year, and the stock price reached a one-year high of $1.40 in July.
Adshead-Bell attributed the price bump to a $15 million investment by Osisko Gold Royalties (TSX:OR), and a buyback clause for 50% in the event of a change of control.
She noted one of the project’s key advantages is it has a water extraction license and a marine concession. Scarce water supplies have become a problem for mining companies in Chile, especially in the country’s arid north. The project also benefits from low elevation — processing can be done using seawater, thus eliminating the need to build a desalination plant or high-altitude water pipeline — and it is power- and road-accessible. Capex is pegged at just over $1 billion.
Special coverage of the 2023 Precious Metals Summit Zurich is brought to you by Vizsla Copper Corp. (TSXV:VCU).
