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Base metals forecast to outpace precious metals in 2013
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19th April 2013
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If demand for base metals proves promising – owing to their link to infrastructure and urbanisation – countries hosting base metals, particularly copper, will benefit, states minerals consultant Venmyn Deloitte exploration manager Andrew de Klerk, noting that base metals demand may be stronger than precious metal demand in the near term.

His statement backs up fund management firm Hallgarten & Company principal and mining strategist Chris Ecclestone’s media statement in 2012 that base metals are likely to outpace precious metals in 2013.

“Analysts seem to be divided on whether base metals or precious metals have the most potential in the near term,” states De Klerk.

He highlights that copper has the most potential to contribute to Africa’s growth, owing to its link to infrastructure and urbanisation and the resultant significant demand for the metal from Brazil, Russia, India and China (Bric) countries, which are experiencing vast infrastructure devel- opment and urbanisation.

“Currently, most of the growth experienced with regard to base metals exploration in Africa is coming from Southern Africa as well as Central/East Africa,” De Klerk points out.

“Africa has a series of prospective geo- logical terrains capable of hosting base metals sulphide deposits. These terrains include the Namaqua-Natal, Damaran, Kibaran and Irumide metamorphic belts and the various cratonic sequences of the continent.”

Southern Africa, in particular, is an important region in base metals exploration, with Namibia and Botswana hosting multiple greenfield and brownfield exploration projects, he notes.

The Central African Copperbelt, traversing Zambia and the Democratic Republic of the Congo (DRC), has also been producing copper and cobalt for more than 100 years and is the basis for numerous exploration projects.

“North and East Africa host prospective geological terrains for base metals, which have yet to be explored in detail.”

Further, De Klerk emphasises that Namibia, Botswana, Zambia, the DRC and Angola have much potential for base metals exploration. “There are numerous projects of similar sizes and stages in these countries. However, few of these appear to be near production as they are either greenfield projects or have problems accessing infrastructure.

Expansion exploration projects, in countries such as in Zambia and the DRC, where projects are based on previously producing mines or near-to-producing mines, may be an exception in this regard and may reach production quicker than ‘virgin’ greenfield projects.

“Some countries, notably Zambia, are very reliant on base metals mining, with the sector contributing between 9% and 10% of the gross domestic product – a large portion of its exports – and being an important direct and indirect source of employment in the country,” states De Klerk.

Further, he notes that South Africa hosts base metals deposits containing nickel and copper in its biggest base metals deposit – the Bushveld Igneous Complex. They are extracted largely as by-products for the primary platinum-group metal (PGM) targets.

“There is enough support in South Africa from government to ensure base metals exploration and the country has a well- established mining and exploration industry capable of supporting projects in South Africa and across the continent.”

However, as consultancies become more and more multiskilled, fewer niche geologists who have extensive relevant experience in base metals projects, which are more often than not geologically unique and complex, are available, he warns.

“Other significant and unique base-metal sulphide deposits in South Africa include the Black Mountain mine, which produces copper, lead and zinc, near Aggeneys, and the Gamsberg zinc deposit, both in the Northern Cape,” notes De Klerk.

The Palabora copper mine is a world-class copper deposit, while Messina, Springbok, Prieska and O’Kiep, in South Africa, have producing copper mines.

Palabora, a large copper mine, smelter and refinery complex, in Limpopo, is managed by the Palabora mining company.

Incorporated in South Africa in August 1956, the mine is currently South Africa’s only producer of refined copper, producing about 80 000 t/y of refined copper, supplying most of South Africa’s copper needs and exporting the balance.

“Many of the base metals mines in South Africa are defunct and currently form the foundation of exploration projects,” De Klerk notes.

Copper/Cobalt Mine

For other countries, base metals projects may be of strategic importance, as is the case with the defunct government- owned Kilembe copper/cobalt mine, in western Uganda, which is being investigated to be privatised, with the intention of reopening.

Reuters stated in 2012 that China’s Gingko Energy Company planned to invest $100-million over a five-year period to revive production at Kilembe. This, however, was never realised.

Uganda’s Department of Geological Survey and Mines says that Kilembe has an estimated four-million tons of ore, of which 1.98% is estimated to be pure copper and 0.17% cobalt.

The mine was abandoned in the early 1980s, owing to political turmoil and a fall in copper prices, but in recent years government has been seeking an investor to resume production.

Production at Kilembe peaked in the 1970s at about 18 000 t of copper cathode a year. The mine was formerly operated by Canada-based Falconbridge, which was later acquired by the government.

Prices of the metal have rebounded, creating interest among investors. LME benchmark three-month copper futures were trading at about $8 400/t in late April 2012.

Meanwhile, De Klerk notes that China has funded several transport and communications infrastructure projects in Uganda, and work on a $350-million toll road, linking Entebbe International Airport to the capital, Kampala, is due to begin in July.

“This could once again become Uganda’s first operating mine and kick-start the country’s dormant mining industry, which has great potential to flourish,” De Klerk concludes.

Edited by: Megan Wait

 

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COPPER GROWTH Copper has the most potential to contribute to Africa’s growth, owing to its link to infrastructure and urbanisation
 
Picture by: Bloomberg
COPPER GROWTH Copper has the most potential to contribute to Africa’s growth, owing to its link to infrastructure and urbanisation
 
ANDREW DE KLERKAnalysts seem to be divided on whether base metals or precious metals have the most potential in the near term
 

ANDREW DE KLERKAnalysts seem to be divided on whether base metals or precious metals have the most potential in the near term
 
 
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