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Yahoo
07-07-2025
- Business
- Yahoo
Crisis in the copper chain: innovation, geopolitics and Australia's role
As demand for clean energy tech rises, the global copper market is facing a supply-demand gap that analysts warn could be near impossible to close if production remains at its current levels. Adding to the market volatility are US president Donald Trump's threatened tariffs, and his executive order to fast-track US exploration and mining of critical minerals, including copper, in international waters. In the face of supply chain uncertainty, countries are prioritising sovereign access to copper. This means targeting new or previously inaccessible deposits, often deeper and more remote than previously seen, while innovators rush to develop technology that could make lower-grade ore economically viable. While Australia is by no means the biggest copper producer (ranking eighth globally in 2024), it is home to the world's second largest copper reserves, making it a key player in any long-term production strategy. With questions over how nations will meet copper demand without triggering further instability, we look at the projects working to keep Australia's supply afloat in an uncertain time. Currently, copper demand sits at around 25 million tonnes (mt) per year. However, estimates suggest that the market trajectory is pushing towards a demand of 50mt by 2050. Ollie Brown, an economist at GlobalData, told Mining Technology that this demand, similar to other critical minerals, is primarily driven by electric vehicles, grid renovations and renewable energy initiatives. Amid growing demand, he says the global copper market is defined by 'lagging supply', while Trump's threatened tariffs from the beginning of this year are 'rattling global prices.' While Trump has not set a levy against copper specifically, he has made it clear that he wants to cut back on imports and increase domestic production. In February 2025, he commissioned the US Department of Commerce to investigate potential national security risks of copper imports ─ the first step towards potentially curbing these goods. While the tariffs and their impacts remain conjecture at this stage, Nicolas Psaroudis, APAC economist at GlobalData, told Mining Technology the threat of restrictions contribute to uncertainty and price volatility. 'Internationally, export restrictions could disrupt global copper supply chains,' he explains. 'A sudden drop in supply could tighten global scrap availability, drive up international prices, and strain smelters already facing concentrate shortages.' If nothing else, the situation has proven an unwelcome reminder of the fact that global mineral supply chains remain vulnerable to the whims of trade tensions and has added to calls to bolster domestic production. Lawrence M. Cathles, professor of earth and atmospheric sciences at Cornell University, says Western nations need to be more willing to expand operations to avoid market dependence. 'It's not enough to say copper is important while refusing to do the work,' says Cathles. 'We don't want anybody to control any major commodity, but just not wanting that isn't enough. You've got to have policies and plans in place to avoid undesirable situations – and part of that is mining in our own territory.' Yet while Australia has no shortage of copper ore, the issue lies in accessing it. According to Dan Wood, exploration geologist and University of Queensland (UQ) adjunct professor, one of the main challenges is finding copper ore that's viable for development. 'Almost all of the large deposits theoretically available to replace one of the top-ten producing mines that will close in the early-2050s have all failed at least one mining feasibility study,' he says. These failures are mainly due to low ore grades and remoteness, as well as low copper prices. Even if prices rise enough to make low-grade copper development viable, Wood cautions that oversupply could trigger a feedback loop: more copper brings prices down, undoing the gains. To make the most of Australia's deposits, Wood says more should be done to access deeper ore bodies. One potential method is caving, when the rock is 'undercut' or drilled beneath the surface and recovered as it falls. While the practice is not uncommon - for instance, it is used in Sweden for iron ore - little is known about how to safely mine beyond a certain depth, and education and training around the method remains low. 'Caving isn't uncommon, but the scary thing is there are so few people left in the world who really understand it,' Wood states. 'If you go deeper than around 1.4 kilometers, there isn't much data on the rock stressors. Take Rio Tinto's Resolution deposit in Arizona. You have to go down nearly two kilometers before you reach the top of the ore, and the rocks that deep are nearly 100 degrees centigrade.' Initiatives to train the next generation of caving miners do exist - for instance UQ has partnered with Rio Tinto and the University of Mongolia to scale up caving expertise at Rio's Oyu Tolgoi mine in Mongolia. However, Wood warns the process is a long one. 'We're looking at a 20-year journey to end up with a cohort of properly trained and, most importantly, experienced caving engineers,' he says. 'This skills gap is serious and unless addressed will be a major drag on future copper supply towards 2050.' Aside from education, technology may provide another route to increasing supply, with innovators looking to make low-grade ores viable development options. One project, a collaboration between UQ and start-up Banksia Minerals Processing (BMP), is developing a more environmentally friendly means of extracting copper from low-grade resources. The process relies on hydrometallurgy rather than pyrometallurgy (water rather than heat) to extract copper from the ore; dissolving, purifying and then recovering metals from liquid using electricity. While the process itself isn't new, having been practiced in the late 1970s in the US, the team had a breakthrough in the purity of the copper produced, making it more viable for commercial deployment. The method also addresses another issue plaguing copper miners - that of impurities. Currently, smelters have strict regulations on how many impurities can be processed alongside the copper ore (with arsenic a particularly problematic contaminant). James Vaughan, head of the university's Hydrometallurgy Research Group, explains the limits are getting increasingly difficult to meet. 'Miners are having to cherry pick ore bodies, and it's a significant limitation on the amount of material that can actually be pulled out of those mines,' he said. 'That's a problem when we need more and more copper." While the typical smelting method sees arsenic exiting as a gas that can be harmful to both workers and the environment, using a water-based method stores the arsenic in a stable, and disposable, form. By addressing this challenge, Leigh Staines, managing director of BMP, says the new technology could unlock copper resources previously deemed unfeasible. 'Our hypothesis is that more than half of known copper resources out there are restricted from development due to those smelter intake limitations,' she says. 'By enabling a feasible pathway for processing of those resources, we're then able to unlock the commercial viability of bringing that supply to market.' The tech can be integrated into modular plants that are anticipated to be far cheaper to construct than traditional smelters ─in the order of hundreds of millions rather than billions ─ and running on an estimated 50% less energy. As a result, the team say the project could pave the way for an economically viable onshore processing option, and bolster Australia's supply chain independence. 'We see a real opportunity from a sovereign supply perspective – gaining access to not only copper itself but the by-products from copper concentrate,' Staines says. 'In the longer term, if this takes off, I really do think it will become the new norm.' Yet while innovations such as these show Australia is already on its way to unlocking copper's potential, another persistent concern is that without sufficient funding, even the best tech won't close the gap. On the global stage, Arthur F. Thurnau, professor of mineral resources at the University of Michigan warns the West is underfunding its mining workforce. 'Governments in Australia, Canada, the EU and the US do not seem to fully appreciate the magnitude of the difference in education and training between these regions and China,' he says. 'Specifically, in the fields of geology and mining, China has more faculty and graduate students within a single university (such as the China University of Geosciences Beijing), than the sum of Australia, Canada, the EU and the US' Without closing the gap, Thurnau warns that Western nations will be forever trying to catch up to China. ' For Cathles, government attitude is also an issue, though he points more towards a lack of realism in the demand for copper in the path to net zero. 'If the goal is to electrify everything and thereby dramatically increase copper demand - double or even triple it – you can't just suddenly mine more because the mining infrastructure cannot be expanded quickly,' he says. Instead, he calls for long-term planning: building a skilled workforce and pursuing a more pragmatic clean energy transition that reduces pressure on supply chains. There may be promising alternatives, he adds, such as battery chemistries that use less copper, pairing renewables with backup systems like gas-powered plants, or a focus on rolling out hybrid rather than fully electric vehicles. While these options may mean it takes longer to reach net zero, Cathles said they lessen the strain on copper production. 'Let's be sensible,' he says. 'We need grounded policies. We shouldn't place sudden, unrealistic demands on sectors that we know can't respond quickly.' Whether through education, innovation, or a more measured path to net zero, one thing is clear: the world must confront the widening gap between copper demand and supply. As Cathles and Thurnau both emphasise, the solution won't come from mining alone. It will require strategic investment in human capital, realistic energy policies, and a willingness to adapt. Without these, Western nations, including Australia, risk falling behind - not only in production capacity, but in their ability to lead a sustainable energy transition. "Crisis in the copper chain: innovation, geopolitics and Australia's role" was originally created and published by Mining Technology, a GlobalData owned brand. The information on this site has been included in good faith for general informational purposes only. It is not intended to amount to advice on which you should rely, and we give no representation, warranty or guarantee, whether express or implied as to its accuracy or completeness. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content on our site.
Yahoo
30-06-2025
- Business
- Yahoo
FDI in Africa in decline, with regional and sectoral divides
Foreign direct investment (FDI) to Africa experienced its sharpest decline in years in Q1 2025, according to GlobalData's Strategic Intelligence: FDI Trends in Africa (2025) report. While this decline reflects a global trend, there are wide sectoral and regional divides. There have also been positive developments in 2025. In January, nearly 50 nations ratified the African Continental Free Trade Area (AfCGTA), inching the continent closer to reaching a single market for its 54 countries. The United Arab Emirates (UAE) and Kenya also signed a Comprehensive Economic Partnership Agreement, aiming to strengthen economic ties in the various sectors. "Access to international credits markets and defining equal-footed investments continues to be the leading factors combative to economic development prospects," the report notes. It adds that FDI can help fill the void created by these barriers. "While the African Union continues to wrestle with inequality and bureaucratic obstacles, the ratification of AfCGTA, on behalf of 48 African Nations in January of 2025, marks a historic step towards economic independence. Moving forward, stronger intracontinental economic ties will lead to more equal-footed FDI,' GlobalData FDI economist Ollie Brown notes. According to GlobalData's FDI database, Africa's global share of opened greenfield FDI projects fell from 3.8% in 2024 to 3% this year. The report projects that this share will remain limited as a mix of geopolitical and financial circumstances keeps investors risk-averse. Global capital expenditure (capex) invested in open greenfield FDI projects in Africa has dropped since 2021, from $17bn (2021) to $6bn (2025). The continent's ability to attract FDI later on in the year will depend "on retained global investors confidence, as opposed to nation-specific factors". "Africa's FDI landscape is undergoing structural transformation. Prioritising strategic realignment over expansion, sizeable shifts are noted across three key domains: volume, sectoral composition and source diversification," GlobalData emerging markets economist Doha Ahmed notes. "Greenfield FDI inflows have declined sharply, reflected not only in capex continuously dropping from $17bn in 2021 to a projected $10bn in 2024, but, simultaneously, project volumes plunged from a peak of 615 in 2022 to just 448 in 2024," she adds. There is a wide regional variability when it comes to which countries are receiving investment. Egypt and Morocco, both in North Africa, are the continent's top FDI destinations. Egypt's joint megaproject with the UAE represented a $35bn investment, which alone drives up the continent's FDI intake significantly. Morocco's strong performance in 2024, the report suggests, can be attributed to "its role as a nearshoring hub for Europe, political stability and a favourable business climate". It underlines how some middle-income economies have benefited from the reshoring/nearshoring trend brought on by heightened global protectionism. After Morocco, South Africa is the third top inward FDI location by project volume. Some destinations that follow, such as Kenya, Tanzania and Tunisia, have been held back "due to rising debt levels alongside regulatory uncertainty". In terms of FDI projects opened, software and IT received 19% of investment between 2022 and 2024, particularly in Kenya, Nigeria and Egypt. Communications and media has 8% of opened FDI projects, renewables and alternatives 7%, and metals and minerals 5%. In the renewable and alternative power sector, there is a major gap between the number of announced projects (32%) and the number of opened projects (7%). The report suggests this lag is caused by sector specificities – in this case, high capex, long project cycles and too much red tape. However, other sectors such as software and IT services, communications and media, and logistics have much higher conversation rates due to "a more execution-friendly environment". Despite a changing global landscape, the US remains Africa's biggest investor, announcing 137 projects between 2023 and 2025, fuelled by "strategic competition with China". In the past, US initiatives such as Prosper Africa and the Development Finance Corporation have also been important sources of funding. However, these organisations are subsidiaries of USAID, which has been undergoing major funding cuts since February, suggesting their funding will decline. "Amidst an increasingly volatile geopolitical landscape, Africa's donor base has diversified, with non-traditional players such as the UAE becoming increasingly involved. This shift denotes the weaponisation of FDI, as it becomes more commonly utilised as a geopolitical tool, blurring the fine line between economic partnership and strategic influence," Ahmed adds. These investments are supported by sovereign wealth funds such as Mubadala and EDQ. GlobalData's analysts expect FDI in Africa to shift away from extractive primary commodities and refocus on renewable energy, tech and manufacturing. They expect African leaders to recognise the power of FDI and therefore continue to improve and liberalise their investment climate as well as invest in infrastructure to strengthen supply chain efficiency. "FDI in Africa in decline, with regional and sectoral divides – report" was originally created and published by Investment Monitor, a GlobalData owned brand. The information on this site has been included in good faith for general informational purposes only. It is not intended to amount to advice on which you should rely, and we give no representation, warranty or guarantee, whether express or implied as to its accuracy or completeness. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content on our site. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
02-06-2025
- Business
- Yahoo
US-Mexico relations: tariff vertigo, construction and silver linings
Ollie Brown is a GlobalData economist focusing on the construction sector and foreign direct investment in the LATAM region. Evidently for constructors and investors on either side of the US-Mexico border, US President Donald Trump's tariffs are rewriting international trade relations with many implications across Latin American economies. Short-term, 25% levies on all exports to the US-- made effective March 4th-- are expected to cripple derived construction demand in Mexico. Long term, there could be benefits as the retainment of high skilled labour and Mexico's foothold in changing global trade could foster more resilient growth, striding away from US dependence. Since Trump's inauguration on January 20th, the White House announced a slew of tariffs on the US's largest trading partners, biased to nations holding significant trade surpluses to the US. Seemingly, US tariffs are being threatened to further national interests, seeking to maximise rent on goods imported to the US, while leveraging access to the US's market as a bargaining tool. Exact levy figures – and market ramifications – continue to fluctuate parallel Trump's sporadic remarks, but to-date (29/05/2025): Mexico faces a 25% bilateral tariff on all USMCA non-compliant exports to the US, made effective March 4th, revoking USMCA free trade terms (consistent with Canada). Mexico is subject to 25% blanket automotive, steel and aluminum tariffs on all exports to the US, whereby steel and aluminum levies hit markets on March 12th, and automotive on April 3rd. Mexico was exempt from further 'Liberation Day' tariffs (along with Canada) announced April 2nd, testament to President Claudia Sheinbaum's cooperative stance as she has avoided retaliation. For example, as part of Mexico's 30-day suspension on US tariffs in February, Mexico agreed to deploy 10,000 National Guard troops to its northern border to combat fentanyl trafficking and illegal immigration. It shows the US is open to trade political concessions for reprieves in the ongoing trade war. For Latin America, while constant policy u-turns make forecasting difficult, the most obvious political concession appears to be cooperating in curtailing migration to the US, one of the Trump administration's defining issues. Hence, the ability to leverage migration control in the tariff tit-for-tat means the likes of Mexico, Brazil, Argentina and other countries south of the US border face comparatively softer treatment. While China, on the other hand, faces an accumulated surtax of 145% in tariffs. Despite relatively subdued tariff measures, in the short-term, levies will abet waning export demand given the scale of US-Mexican trade. Evidently, Mexican exports to the US have been growing YoY to £505.9b in 2024. Similarly, US export share has increased to approximately 82% in 2024, indicative of how dependent Mexico had become on US trade. Therefore, tariffs will disproportionally weigh on Mexico's economy as exporters scramble to substitute US demand. Additionally, FX volatility has been adding to bearish sentiment, albeit recently, the US dollar has dramatically depreciated against the Mexican Peso, from 20.84 (March 11th) to 19.54 (March 24th)-- as illustrated in Figure 2. Therefore, peso price appreciations will somewhat soften the blow to Mexican traders as their currency becomes more regionally competitive. Still, this boost in value will not be substantive enough to counter the expected loss in demand from US levies. Previously, GlobalData argued that tariffs on Mexico would almost inevitably be inflationary, as higher import costs would translate into elevated building material prices and higher barriers to obtaining new building permits which would stunt construction output. However, it now seems that the inflationary effects from the tariffs are being outweighed by the deflationary effects of waning demand as trade volumes plummet. Effectively, the higher prices Mexican constructors would hypothetically have to pay on the supply-side are currently redundant, because there isn't sufficient demand to action the project. Regardless, the short-term net effect is negative. Therefore, GlobalData has revised Mexico's construction output forecast to decline by 7% in 2025. Similarly, economic growth forecasts from TSLombard have been revised downwards from 0.5% to 0.2% for 2025. Parallel to ongoing US-Mexican negotiations over trade in goods and services, Mexican migration to the US is expected to drop as the administration revamps deportation efforts, which have been an effective deterrent for would-be migrants. Given that US remittances to Mexico totalled approximately $65bn in 2024, mass deportations will compound short-term pain. However, the retention of skilled labour in Mexico, previously lost to US industries, could foster more resilient, long-term growth. Figure 3 showcases that in 2022, undocumented workers accounted for approximately 14% of the US's total construction workforce. It is a figure that likely increased in parallel with record surges in migration under the Biden-Harris administration. According to CPWR, workers of Mexican origin account for approximately one-third of the US's total construction labour (2023). Therefore, Trump's hostile migratory policies will inadvertently redirect construction labourers back to Mexico, increasing the ability of Mexican construction to source skilled labour. Mexico's capacity to capitalise on a more robust labour force, however, hinges on its ability to foster the public-private sectors to generate funds to stimulate construction jobs and growth. As previously mentioned, decreased US-Mexican trade will infringe this ability, but long-term, Mexico is taking steps to attract a more diverse assortment of investors. For instance, all trade partners listed in Figure 4 face US levies of varying levels– and correspondingly pose a substitutable investment, particularly in China. Mexico also reached a revamped trade deal with the European Union in January, is currently discussing trade opportunities with China, and is reportedly exploring closer relations with Mercosur– Latin America's regional trade block. GlobalData forecasts rebounded (albeit modest) construction growth in Mexico at a 2% CAGR from 206 to 2029. "US-Mexico relations: tariff vertigo, construction and silver linings" was originally created and published by Investment Monitor, a GlobalData owned brand. The information on this site has been included in good faith for general informational purposes only. It is not intended to amount to advice on which you should rely, and we give no representation, warranty or guarantee, whether express or implied as to its accuracy or completeness. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content on our site. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data