Innovatia

process of an average of 16 years from discovery to production and increased regulatory and political uncertainty in the two largest copper producing countries, Chile and Peru, contribute to these challenges.

THE CLEAN ENERGY TRANSITION WON’T HAPPEN WITHOUT COPPER By Jessica Martyn

particularly as clean energy technologies are more copper intensive than fossil fuels. Global supply chain disruptions for copper will directly impact the energy, economic and national security of Australia and our strate- gic partners – particularly as demand contin- ues to rise across China, India, and much of Southeast Asia. The world is not developing enough cop- per mines to meet expected demand – and the fact that the construction of each new mine takes seven to ten years only makes the need for investment more urgent. A chronic copper shortfall is forecast to commence in the second half of this decade, threatening the clean energy transition as well as the se- curity of our energy, our economy, and our nation as a whole. In fact, copper scarcity may emerge as a key destabilising threat to international security. Without adequate investment and sup- port, the supply challenges impacting the clean energy transition are likely to result in energy scarcity and higher prices, a trend which is already occurring in Europe and the UK and fraying consensus on the removal of fossil fuels. As the home of the world’s second largest copper reserves, our nation is well positioned to play an important role in increasing the supply of copper to support the clean energy transition. In that regard, KGL’s Jervois project is well positioned as it is one of the few licensed high- grade copper projects that can be in produc- tion at a time when the world is expecting to face a long-term structural deficit in the cop- per market.

However, the mobilisation of our copper resources from deep underground or remote greenfield locations will present challenges, requiring supportive government policies – particularly around the construction of infra- structure, the availability of finance and skilled labour, and the incentivisation of further cop- per exploration – to be internationally com- petitive with the large porphyry copper mines in Latin America. Source: Wood Mackenzie, Bernstein, G&R models 1.2 1 0.8 0.6 0.4 0.2 0 Figure 1 Average copper grades of ore mined, 2005-2020 (Source: AME, company reports)

35,000

“The key to a successful clean energy transition is made of copper.” 33,000 31,000

Jervois Copper Project

Essential to modern technologies and economic and national security, copper plays a critical role in the Clean Energy Transition – and while the Australian Government has carved out an ambitious implementation plan to shift from fossil fuels to renewable energy sources, the challenges ahead are significant.

2030 LT gap: 8.1Mt

29,000

27,000

25,000

The road ahead may be challenging, but the payoff for investing in Australian mineral pro- jects – a secure, reliable and affordable clean energy supply chain, local job creation, min- eral wealth, and security for our nation and our partners – is worth its weight in copper. 23,000 2021 2022E 2024E 2026E 2028E 2023E 2025E 2027E 2029E 2030E Source: Woodmac, Goldman Sachs Global Investment Research Global copper production Global copper consumption Figure 2 BHP estimates that copper potentially needs around US$250 billion of investment by 2030 to address the forecast increase in demand.

S ince the oil shocks of the 1970s, there have been strong economic incentives to reduce reliance on fossil fuels, reinforced by considerations of economic and energy secu- rity as well as environmental preservation. Now, if we are to preserve our quality of life as well as our environment in line with ambi- tious targets for the clean energy transition, we must accelerate the adoption of renewa- ble energy solutions. To keep global warming to no more than 1.5°C, as called for in the Paris Agreement, emissions need to be reduced by 45% by 2030 and reach Net Zero by 2050. However, to date, government commitments fall far short of what would be required to achieve this goal. The clean energy transition requires an enor-

mous increase in demand for critical minerals. In fact, the International Energy Agency (IEA) estimates that the achievement of Net Zero will require a sixfold increase in critical minerals, and the process will be uniquely challenging, according to KGL Resources Exec- utive Chairman Denis Wood. “What the world is trying to do – to get off oil, the most energy intensive molecule we have, and convert the whole electricity grid and all infrastructure – has never been done before,” Mr Wood said. As the metal of electrification and the most widely used metal in transmission infrastruc- ture and energy generation and storage, cop- per is critical to the transition, decarbonisa- tion, and electrification of the global economy,

Significant new supply needed beyond 2025...

Potential supply gap in 2035 10Mt

2020

2025

2030

2035

Trend economic growth demand Renewable energy demand

EV demand

Copper supply (includes sanctioned projects)

Additional electrical grid demand

INNOVATIA

324

INNOVATIA

Additional Information >

| Transformations

325