Mining the Middle East’s rich seam of copper

Reuters/Rogan Ward

Copper is hot right now. Mining and trading giant Glencore is seeking to buy Canadian copper and coal miner Teck Resources for $23 billion.

The US’s Newmont has raised its bid for Australian gold and copper company Newcrest to $19.5 billion.

Middle East countries too are interested in the energy transition’s crucial red metal.

Copper is highly electrically conductive and much cheaper than other conductive metals such as silver and gold.

An oft-quoted statistic is that an electric car requires two and a half times as much copper as an internal combustion engine vehicle.

Wind and solar farms use three to eight times as much copper per megawatt as a coal or gas power plant.

• Oman opens bids for three mining sites
• Saudi Arabia shortlists 13 bidders for two mining sites 
• UAE-Saudi non-oil trade surges 70% to $37bn in last decade

The requirements for new energy systems add to the demand for conventional wiring and piping in housing, consumer electronics and other needs.

Electric carmaker Tesla thinks mining and refining the critical raw materials for the energy transition will need $1.2 trillion of investment – $215 billion of which goes to copper.

Worldwide reserves are ample to meet future demand but ore grades have been steadily declining, raising the amount of waste rock which must be processed. 

Several of the world’s leading copper producers – notably Chile, Peru and the Democratic Republic of Congo – suffer from strikes, protests or political insecurity or, in the case of China and Russia, are regarded with geopolitical suspicion by Western countries.

These five countries between them own 57 percent of global mine output and 65 percent of copper refining, of which China alone accounts for a massive 45 percent. Chinese corporations also have important investments in African output.

New mines take many years to start up. In January Chile rejected a new project because of its environmental threat to penguins and dolphins.

Although the US wants to boost domestic minerals output, the Biden administration last January effectively cancelled mining in a wilderness area of Minnesota, while an Alaskan copper and gold mine has been vetoed because of risks to salmon spawning grounds.

But the big new Mena prospect for the red metal is Saudi Arabia. Gold mining giant Barrick began output from the Jebel Sayid mine near Al-Madinah in 2016, in a joint venture with state firm Ma’aden.

Copper is today a smaller part of Ma’aden’s operations than gold, phosphates and aluminium.

However, minister of industry and mineral resources, Bandar Al-Khorayef, says the country has $222 billion worth of copper resources at current prices, and aims to attract global mining companies by approving licences speedily, and avoiding the community protests and government tax grabs that blight other nations.

Copper prices reached an all-time high in 2021 and, although they have fallen back, remain well above historic averages.

The Middle East opportunity

This situation creates three opportunities for Mena countries.

First, aluminium is often a suitable substitute for copper, though it doesn’t always perform as well. Five of the six GCC countries plus Iran and Egypt are important smelters of aluminium, the UAE being the world’s fifth largest.

Second, there’s the opportunity of the region’s own copper resources. Historically, the Middle East has underplayed its mineral wealth outside oil and gas, but now there’s growing attention to the potential for mining to diversify the economy.

Iran is the only significant miner of copper in the Mena region today, from the giant Sarcheshmeh mine near Kerman.

Oman was referred to in ancient Mesopotamian texts as the land of Magan, which supplied copper to make the crucial alloy bronze. Today it produces small amounts but is starting up new mines and offering exploration areas along the ophiolite belt spanning the Oman Mountains.

Morocco has some small mines in the Atlas Mountains and is considered underexplored.

Jordan, meanwhile, has controversially sought to open parts of the Dana nature reserve to copper exploitation.

Still, there is a long way to go. Saudi Arabia needs to attract more world-class partners like Barrick, and address the major issue of water availability for mining operations. In 2020 the country exported about $350 million worth of copper ore, far short of the $200 billion or so it realises from oil annually. 

This leads to copper’s third area of opportunity for Mena countries. The kingdom wants to be more than just be a seller of raw materials and aims to boost its downstream value chain, including the processing of minerals and manufacture of items from them.

While it is scaling up mining at home, it can import raw materials to develop its processing industry. Abundant, inexpensive gas and renewable energy, and their pivotal geographic position, could allow the GCC states in particular to become centres for low-cost, low-carbon refining of copper and other metal ores.

In January Ma’aden and the Public Investment Fund launched a joint venture, said to have $15 billion of capital available for international investments, targeting copper among several other minerals.

The fund has reportedly had discussions with Brazilian group Vale over taking a stake in its copper, cobalt and nickel unit.

Riyadh has ambitions to develop the local manufacture of batteries and electric vehicles.

The region’s long mining history has been overshadowed this past century by oil. The pendulum may now swing back as the energy transition ticks on.

Copper and other critical minerals will not replace petroleum earnings. But if they catalyse new industries, they can put a shine on the diversification drive.

Robin Mills is CEO of Qamar Energy, and author of The Myth of the Oil Crisis