CAPE TOWN (miningweekly.com) – Plunging copper prices have pushed the copper industry into a quandary, with global demand deteriorating to an even worse extent than many people realise, Bernstein senior research analyst Paul Gait told delegates at the 2016 Investing in African Mining Indaba this week.

Gait noted, however, that copper was fundamentally scarce in an economic sense, as it was becoming harder to explore for copper and develop a mine.

“The average lead time in finding copper is 30 years. It used to take 10 to 15 years. Copper mining is getting harder, not easier,” he stated. 

He said the dramatic increase in mining productivity seen in the 1970s to the 1990s had run its course, as it was getting increasingly hard to overcome the effects of geological complexity. 

He added that it was unlikely that the copper industry would see a repeat of either the US in the early 1900s or Chile in the 1970s – the golden eras for copper exploration.

“Grade declines are a fact of life, yet demand will continue to grow.”

ZCCM Investment Holdings CEO Pius Chilufya Kasolo, meanwhile, pointed out that most of the mines in Zambia were not making money. The Zambia economy, which has relied heavily on the copper industry over the years, is facing turbulent times, as its currency, the kwacha, has tumbled in tune with the problems experienced in the copper industry.

But Kasolo said he feared that putting a hold on copper exploration because of a need to save money, could count against Zambia in the long run.

“With a shortage of copper, the price may go up and the guys will wake up and it will be too late.”

Gait concurred. “At the moment the problem is oversupply but we know that oversupply will unwind itself.”

Panelists participating in a special session on Africa’s Copper Potential suggested that South America may be a more abundant region for copper reserves than Africa; however, Kasolo believed “the last frontier for copper is in Africa”.

“I hear reports that only 20% of the world’s copper is in Africa, but I think there’s far more. Apart from Zambia, there’s more in the Democratic Republic of Congo.”

Kasolo said the problem in Zambia was that the cost or production was high, owing to Zambia being a landlocked country and electricity supply challenges.

Zambia has been struggling with electricity shortages, owing to the impact of a drought on hydropower plants.