Copper – Gabriel Laffite





………. Rising demand for copper (and lithium, also abundant in Tibet) means not only more intensive copper mining, but also further globalisation of Tibet, tying Tibet to the volatile boom and bust cycles that chronically afflict the mining industry. This could have serious consequences in Tibet.

Mining, crushing  and concentrating the ores mined are all ramping up in Tibet, likewise the more profitable step of refining the concentrates in a smelter which, at great heat, melts and separates the metals to be separately poured off.

But that is not the only way to make money from copper. Traders play a big role in the price swings, betting on what future prices will be. Smart traders make money when they correctly anticipate copper prices will go up; and make money when they correctly forecast prices will drop, selling now and buying back later at a lower price. This exaggerates the swings. China used to complain about arbitrageurs speculating on the prices of basic commodities; now it has joined them. “Shanghai is launching a challenge to London’s dominance in metals trading by issuing a new futures contract for copper that analysts say has the potential to become a global benchmark. The Shanghai International Energy Exchange (INE) will start trading monthly copper futures denominated in renminbi, in contracts based on the metal to be delivered into warehouses in China.”

A few years ago, China bought out the biggest metals speculation hub, the London Metals Exchange, and is now backing it up with massive stashes of actual copper, for those moments when a bet goes wrong, and a trader has to deliver actual copper at the agreed price. The actual tonnage of copper stored in bonded warehouses in Shanghai varies between a low of 200,000 tons to a high of almost 700,000 tons. These are further reasons for accelerating the extraction of copper deposits in Tibet. The copper deposits of Tibet are now “a play” in trader jargon. Whether copper mining in Tibet booms or busts, Shanghai copper futures traders will make money.

Right now, as demand surges, price surges and lots of hot money pours in. However, there is a big mismatch between the speed of all that hot money sloshing round the world, and the time it takes to get a copper mine into production, usually a decade’s work. That is why mining is boom and bust. In a bust, the mining company can abandon the mine and the tailings dams, claiming bankruptcy. Nothing Tibetan communities can do about it, because from the outset they are disempowered.

That’s a danger for Tibet. In boom times, mining companies are keen to get going, willing to cut corners, bribe officials and ignore environmental assessments, in order to get into production. In bust times, some go broke, and walk away from waste dumps and tailings holding dams storing millions of tons of pulverised rock containing toxic heavy metals, leaving others to do the long term work of preventing leakage into rivers.

Most copper deposits in Tibet are close to the Yarlung Tsangpo river and its tributaries, including big dams upriver from Lhasa on the Kyichu. The Yarlung Tsangpo is the collision of two continents, where part of India was pulled deep into the Earth underneath Eurasia, generating heat and pressure over long periods, melting metals, pushing them up to form ore deposits. Even the copper deposits in Kham, east of Chamdo, are high above rivers and the danger there of dam collapse releasing into the river heavy metals Tibetans knew all along had to be left alone,  deep in the earth.

Those deposits have been assessed by Chinese geologists for decades, followed by economic geologists generating spectacular profit potential numbers. The mines they have planned, ready for investment, typically envisage operating for 25 or 30 years of extraction, before the deposit is exhausted and they walk away, leaving behind a mountain of toxic tailings.

The biggest mines currently are Gyama and Chulong, both on the Kyichu above Lhasa, and Shetongmon, to the west of Shigatse. But if the copper price is right, there could be dozens of mines, each with its own electricity supply, crushers, concentrators and probably smelters, all stages requiring lots of energy.

At the end of 2020 copper is at the highest price in seven years, similar to the boom years between 2006 and 2012, which were only briefly interrupted by the global financial crash of 2008. The smart money is betting it will stay high or go higher. One of the sharpest traders, Trafigura, “is forecasting a near 800,000 tonne increase in Chinese copper demand in 2021 alone as Beijing invests heavily in its grid and renewable power.” If demand exceeds supply by only a small amount, prices rise dramatically; that is how capitalism works.

The new owner of the Chulong deposit at Songtsen Gampo’s birthplace plan to blow up, dig out, crush and concentrate 30 million tons of rock a year, until 2037. Nearly all of that rock, crushed to powder, will forever remain on that high mountain ridge, since the amount of copper, molybdenum, gold and silver in any ton of rock adds up to less than one per cent. That’s a massive legacy to leave with Tibetans, after the mine is exhausted, as planned, by 2037.

The world’s biggest mining companies, acting together, have responded to recent disastrous failures of mine waste tailings dams, by coming up with agreed standards and principles for future mining practice. The Global Industry Standard On Tailings Management published in August 2020 by the International Council on Mining and Metals (ICMM), and the UN Environment Programme, states its first principle: “Respect the rights of project-affected people and meaningfully engage them at all phases of the tailings facility lifecycle, including closure.”

China’s miners in Tibet fail this first principle. No Chinese miner has joined ICMM. Nobody asks Tibetans for permission to mine. Still less are communities involved in the planning and management of millions of tons of mine waste, stored above ground for thousands of years after the mine has closed.

Where will the electricity for all that rock crushing, concentrate cooking and smelting come from? The existing Zhikong 直孔水电站 and Lhundrup Pondo (Pangduo 旁多水电站)hydro dams on the Kyichu Lhasa River could be supplemented by cascade dams nearby. The recently announced new dam on the Nyang Chu above Nyingtri is only 200 kms from the Chulong and Gyama copper mines. Either way, it means more damming of substantial Tibetan rivers that feed in to the Yarlung Tsangpo. Each location is risky in such geologically active districts. The 2018 massive landslides that temporarily halted both the Yangtze[4] and Yarlung Tsangpo[5] are a reminder that Tibet is a young, rising, unstable land, made much more unstable by glacier melt now so fast that massive portions of glacier can slide into rivers, bringing with them so much rock that the greatest of rivers can be stopped altogether, until the accumulating waters powerfully break through. Hydrodammers beware.

Note: Thank you GL for sharing this post