Why is copper so important for the future of the economy? What is entailed by developing a project in this space today?
Copper is one of these amazing metals that has unique qualities, and is applicable in a wide variety of different industries, from the tech sector right through to plumbing. It is the bellwether industrial metal of the world and it survived all of the threats over the years, such as the challenge of being replaced by plastics in plumbing, for example. As it is already widely recognized, its application is going to become increasingly important as we progress down the electrification of cars.
The easiest places to mine copper have been developed over the years in large parts of Africa and South America, traditionally stable places to operate. Now exploration is needing to happen in more difficult jurisdictions such as the Far East, Russia, China, and Central Africa.
To develop a project, you need the confidence that you invested in a mining operation that is going to stand, so an effective rule of law and a stable political environment are key. Secondly, a well-established mining framework is also important so that you do not run into issues related to licensing, exploration, and processing. Luckily for us, Zambia ticks all those boxes and this is why we targeted it from the very beginning.
What is ARC exploring for in Zambia and why is it an exciting mining jurisdiction?
Zambia remains one of the last major, undeveloped, copper opportunities. The North-West region where we are operating is not a traditional site, and despite the fact that the large deposits are lower grade, there are much bigger resources. Our project is located in the Domes region, where Anglo American used to own the entire 1600 square kilometer area, but when they left Zambia in 2000, the entire site was acquired by other players. On the Eastern side, there are three major multi-billion-dollar copper operations, and on the Western side, spread over roughly 850 square kilometers, is our project. The challenge for a junior company is the limited capital, so, to do justice to this area, we would have needed very deep pockets. Fortunately, once we started hitting copper mineralization, we were approached by a number of majors, out of which Anglo American offered us the best deal, which led to us signing an agreement for an investment of around $90 million.
Why, in a moment when demand will definitely upscale, is it so hard to find investment for junior mining companies?
Inevitably, junior mining companies are not good mining operators because it is a totally different ball game, and you need serious expertise to construct the actual operation. As a result, investors are perceiving them as risky ventures. However, exploration companies are more fortunate because they are very motivated to find a deposit, and sometimes they discover opportunities that are attractive to a major company. The success rate of majors in terms of exploration has been mixed, so collaboration with junior mining companies makes sense. The success rate of majors in terms of exploration is extremely poor, so they often turn to some of the juniors for help in this space. In addition, the explorers in major mining companies have probably less risk appetite, and they do not go into certain geographies, leaving this opportunity open for junior players.
What are the future plans for the expansion of the company?
Besides the Zambia project, we have got a very attractive property in the Kalahari Copper Belt in Botswana, which we just started drilling and plan to continue to explore. Our advantage is that we can act very fast once we identify new opportunities, and we are not risk averse. For instance, we identified another interesting asset in Namibia, which we think about pursuing in the near future. Given that we acquired our stake in Zambia through a company that was not able to further fund their activity, we will continue to try and push this approach as our future strategy.
What did you see 25 years ago that you thought was particularly meaningful to pursue a career in this industry?
At the time when I joined Anglo American in South Africa I had mixed feelings about a career in natural resources, but soon enough I found out it was actually fascinating to be able to have a varied career within different divisions of the company, from mining to accounting, finance and acquisitions. Being part of a multinational was very attractive to me and exposed me to different parts of the world I could only have dreamt of visiting.
