From the energy production side, reducing carbon emissions mainly refers to the transformation of energy structure. In the process of energy structure transformation, the vigorous development of wind power, photovoltaic, hydropower and other emerging industries is inseparable from the supply of upstream metal raw materials. First of all, wind power construction has greatly increased the demand for carbon fiber, rare earths and magnetic materials (motors); after photovoltaic access to the Internet, the matching energy storage facilities will drive the demand for lithium; generators, the core of hydropower projects, are inseparable from a variety of magnetic materials such as rare earth permanent magnets, electrical steel, and so on.
In terms of energy consumption, industrial production, especially upstream smelting and processing, is a major source of carbon emissions. Carbon peak requires reducing energy consumption in industrial production.
At present, the main measures taken include: iron and steel, electrolytic aluminum, alumina and other industries strictly prohibit new production capacity, reduce production, double control of energy consumption, etc.; high-performance magnetic materials are used to save energy and reduce consumption of industrial motors; new energy metals such as lithium, cobalt and nickel contribute to the popularization of new energy vehicles and reduce the dependence of the automobile industry on fossil energy. Implement differential electricity prices, encourage the elimination of inefficient, backward production capacity and energy-saving transformation, and achieve the clearance of backward production capacity through cost means.
For traditional industrial metals, industry logic has shifted from the demand side to the supply side. In 2003-2007, China's rapid integration into the world trading system and the rapid process of industrialization and urbanization made demand a decisive factor in the supply and demand system. The current global economy lacks the momentum for rapid growth, and from the demand side, there is no basis for a long-term bull market, but the carbon neutralization process has opened the door to supply-side-driven upward prices of metal raw materials.
Copper is a kind of metal which is obviously restricted by the production capacity of the mine end. We take copper as an example to observe the mining industry at the top of the industrial chain. The progress of ore prospecting has entered a stalled period. S & P Global Market Intelligence calculates 224 large copper mines discovered between 1990 and 2019, of which only 16 were discovered in the last 10 years, while only one was discovered after 2015 (Chile's Marimaca copper mine, discovered and held by Coro Mining in 2016, has a total of 640000 tons of reserves).
Human footprints have long been all over the world, and so far the "big mines" that have not been discovered are very rare. Generally speaking, the larger the mine is, the higher the grade is, the more obvious the geological characteristics and metallogenic regularity are, and the larger the scope of "geological anomalies" is, the easier it is to be found. After a huge amount of exploration investment in the first decade of the 21st century, the large mines that are easy to identify have long been known.
We believe that the "gap" found in this round of prospecting is permanent. There are indeed fewer and fewer items with large scale, good economic benefits and easy development, and the main form of continued increase in resource reserves in the future will no longer be prospecting and discovery, but more likely to be the increase of existing mine reserves, satellite mine development, optimization of technical and economic indicators, and so on. About ten years later, most of the mines in service will still be the current batch of mines, and the copper industry will enter the "aging stage".
In recent years, the raw ore grade of copper ore has been decreasing, and it is expected to continue to decline in the future. Since the 1930s, the raw ore grade of copper mines in the United States has fallen from more than 2% to about 0.4%, according to the US Geological Survey. This phenomenon is very common around the world, and in the early days of the development of most "virgin lands", the grade of copper ore was even more than 10% (for example, between 1850 and 1880, the average grade of copper ore in Australia was 16%; Papua New Guinea often had a grade of more than 30% in 1907-1970).
For mines, the grade of treated ore will decrease with the progress of mining. Because the operator will give priority to mining high-grade and low-cost orebodies in order to maximize the net present value. For example, Escondida Copper Mine, the world's largest copper mine owned by BHP, produces 1.19 million tons of copper in 2020, with an average ore grade of 0.84%, which is the lowest since it was put into production in 1991. correspondingly, the ore grade from 1991 to 1997 remained at a high of more than 2.6%. The Cobre Panama copper mine operated by First Quantum in Panama began commercial production on July 1, 2019, with an average annual output of about 300000 tons after production, with a peak of 400000 tons. It is the largest copper mine put into production in recent years. In its scheduling plan, it was put into production in 2019 and reached production in 2022. The highest ore grade of the whole scheduling plan was 0.47% in 2024, and then gradually fluctuated to less than 0.3% at the end of the service life.