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Recycling & the Future of Mining

April 15, 2012 7 comments

For thousands of years the mining industry has supplied the world with the raw materials the growing population needed for ever increasing consumption. However, mining is not the only supplier of these raw materials. Next to the primary mining industry a secondary mining industry is growing: ‘urban mining’. The existing stock of materials in the urban environment is recycled more and more. 38% of iron input in the steel making process comes from scrap. The average ‘new’ copper cable contains some 30% recycled material. The more we recycle, the less we need to mine. As mining costs increase because ‘easy’ mineral deposits are becoming scarcer and as technological improvements make recycling more competitive, the impact of urban mining on the traditional mining sector grows. How does this change the perspectives of the mining industry in the long term? And which factors will play an important role in shaping this future?

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Record Copper Prices Prompt Switch To Aluminum

March 17, 2011 1 comment

“If copper prices keep rising, aluminum could end up being substituted for 20% of the global 19 million metric ton annual refined copper market, according to Alcoa estimates. At current copper prices, that figure is 4% to 5%, or about 800,000 fewer tons of copper being used.

Annual copper substitution losses over the last five years have averaged 425,000 metric tons, or about 2% of the market, according to estimates by Anglo-Australian mining giant Rio Tinto PLC. The mining company expects losses to increase to around 3% of the market in 2010 and 2011.

The substitution may end up tempering copper prices somewhat. But most see prices generally trending higher as burgeoning demand from the recovering global economy is expected to outstrip mine supply, leaving industrial companies and their customers in the lurch until they can find substitutes.”

Source: Wall Street Journal, March 17 2011

Observations:

  • In developed markets each car contains some 20 pounds of copper, currently worth close to $100. About 65% of copper is used for electrical appliances, the bulk of the rest is used for construction (roofing, plumbing).
  • Both in construction and in electrical appliances copper can be replaced by other metals or conductors, most often aluminium.

Implications:

  • Substitution of copper causes a 2-3% loss of market annually, which is more than set off by growth of the customer industries. However, as potential for replacement is high (up to 40% in cars and similar appliances), high copper prices will certainly trigger the manufacturing industries to speed up their research.
  • In the long term the increasing percentage of copper that is recycled has a large impact on the global demand for mined copper. Especially if growth slows down the recycling stream will to gain market share vs. miners.

©2011 | Wilfred Visser | thebusinessofmining.com

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