Is Enough Gold and Copper Being Discovered? The Answer is Complicated
New discoveries are declining but ‘old’ discoveries continue to grow
It’s no secret that discovery rates for most commodities are declining but are explorers finding enough to meet future demand?
That is the question Richard Schodde, managing director of Melbourne-based MinEx Consulting, attempted to answer for copper and gold during a presentation to the International Mining and Resources Conference in Sydney last month.
Schodde said the answer to the question was a classic economist’s answer – yes, no and maybe.
“The answer of whether or not we are having enough metal going forward is an interesting one, and the answer is going to surprise you,” he said.
The case for no
Roughly 800 million tonnes of copper have been mined up until 2022. A 1-3% per annum growth rate between 2024 and 2050 would equate to 714-831Mt of copper demand over that period.
“That metal’s got to come from somewhere, so there’s a dramatic need for new mines to be developed, which means you’ve got to make new discoveries to feed that,” Schodde said.
Schodde noted that the rate of new copper discoveries had collapsed in the past 15 years.
Based on copper deposits of at least 100,000t, 139 had been found between 2010 and 2023, equating to 207Mt of contained copper.
However, over the same period, 272Mt of copper had been mined.
“So we’re going backwards in that regard,” Schodde said.
“When you look at the story for gold, you see something similar, but not as dramatic.
“In terms of the downturn, the number of discoveries has halved from 40 to 20 per year globally.”
There were 645 gold discoveries between 2010 and 2023 of at least 100,000 ounces, amounting to 1.96 billion ounces.
Over the same period, 1.36Boz of gold was mined.
“So, to answer the question, are we finding enough copper and gold to meet future demand, based on what I’ve shown you so far, the answer is no, we’re not finding enough,” Schodde said.
“Obviously, we’re not making enough new discoveries to replace what’s being mined.
“Particularly so for copper, the story is very dramatic, but this is not the complete picture for the industry, and that’s the point that we need to go on to.”
The case for yes
Schodde pointed out that making new discoveries were only part of the story.
“We’ve also got to look at what the growth story is for old discoveries, things that were found several decades ago,” he said.
“One thing you’ve got to recognise is that as you get more knowledge on the mine, and as you drill it out, develop it, you find that the resource base actually grows.”
Schodde used BHP’s (ASX: BHP) Olympic Dam copper-gold-uranium deposit in South Australia as an example.
Olympic Dam was discovered in the 1970s and it was about a decade before the first resource was announced and more than 35 years after the operation started up, resources and reserves were at their highest point.
“There’s a lot of metal that’s being added to inventory that doesn’t really get onto the books in terms of new discoveries, but it’s old discoveries instead,” Schodde said.
“When I define a discovery, the discovery date is really the date when there’s a significant economic intercept. It’s usually when there’s a drill hole put into it that changes the value of the project, changes the value of the company that owns it.”
Schodde said the size of the discovery was based on the latest estimate of the current resource plus cumulative production and cumulative losses but acknowledged that approach ignored the timing and value of subsequent exploration efforts to grow the discovery.
“An alternative approach to looking at how the discovery story goes is to actually simply look at the incremental growth in the reported resource base on a year-by-year basis.”
Schodde looked at 50 giant copper deposits that were found before 2010 and looked at how they grew over time in the period from 2009 to 2013,
Between 2009 and 2023, the pre-mined resource for the 50 deposits grew by 527Mt of copper.
In 2009, the 50 deposits had combined resources and reserves of 1469Mt.
“That grew to 1995 million tonnes [in 2023], so over that 13-year period, those 50 deposits that I just did an analysis on grew their pre-mined resource by 527 million tonnes,” Schodde said.
“One thing to remember is that this is not the complete universe of copper discoveries or mines that were found pre-2010, but I chose the really big ones, and they account for about two thirds of all of the resource that’s out there.”
On an incremental basis, it averages out to be 40Mt of copper per year added.
Adding the inventory for old discoveries and existing mines to new discoveries made after 2010 painted an interesting picture.
“Twice as much metal has been added to inventory from old projects than for new discoveries, and when you compare that number, which is 830 million tonnes for both of those, that is more than three times the amount of metal that’s been found or being mined over the same period,” Schodde said.
“We’re actually finding more copper metal than we’re actually mining, so the world is not running out of copper metal.”
Schodde did the same analysis for 150 major gold deposits discovered before 2010 and found that between 2009 and 2024, the pre-mined resource for those deposits grew by 825Moz.
Those 150 deposits make up around 69% of total known gold resources.
“And if you do the incremental year-by-year story for them, you find that, on average, about 40 million ounces a year has been added to inventory from those old discoveries and old mines,” Schodde said.
“Doing a similar exercise to what I did for copper, adding in the old projects to the new discoveries, you find that we actually found a total of 1582 million ounces of gold over that period, from 2010 to present, which compares favourably with 1470 million ounces of gold mined, so we’re sort of treading water in that regard.
“So, to answer the question, are we finding enough copper and gold to meet our future needs? The answer is probably yes.
“When you factor in the resource growth from existing mines and discoveries, we are adding to inventory, and therefore we actually do have enough copper in place to meet our needs.
“The story for gold slightly more marginal, but it’s still fairly positive.”
The case for maybe
While the data pointed to enough inventory, Schodde said it was more complicated than that.
“What we need to recognise is that those old mines, which I’m counting on to do the heavy lifting, don’t exist forever. They eventually run out of ore,” he said.
“What do we do then? We have to replace them with projects that come from the inventory of new discoveries.
“When you look at the timeline associated with getting a discovery up into development, into production, for the case of all commodities out there, it’s about 15 years – it’s a little bit shorter for gold, a little bit longer for copper.”
Schodde said that since 1950, only 41% of discoveries across all commodities had become mines. It’s 46% for gold discoveries and only 36% of copper discoveries.
Of copper discoveries made in the 1950s, 65% of became mines.
“But if you look at the following decades, the rate of progress in turning a discovery into a mine actually becomes lower and slower,” Schodde said.
For gold, 80% of 1950s discoveries became mines, compared to just 30% for 2000-09 and 22% for 2010 to 2024.
On a regional basis, 20 years after discovery, just 17% of all gold discoveries in Australia, Canada and the US have been developed, versus 27% in Latin America and 29% in Africa.
The numbers were worse for copper. Apart from Africa, where 31% of discoveries had become mines, just 10-12% of all copper discoveries in the rest of the world were developed after 20 years.
“I did an assessment of 250 projects that are currently at the prefeasibility or feasibility study stage and found that about basically half of them are being advanced at a reasonable pace, and the other half are being stalled,” Schodde said.
“And of those that are stalled, 44% of them are associated with core economics – they just don’t make money.”
The other 56% were stalled due to environmental, social and governance issues.
“So, to summarise that question, are we finding enough copper and gold to meet our future demand, when you take into account the delays associated with new discovery and development, the answer is probably not,” Schodde said.
“This issue isn’t a problem in the next decade, but in the following decades, as the old mines close down, it’ll start to bite us in the bum.”
Schodde’s presentation slides can be found here.