Catalyst with Shayle Kann - Keeping copper from limiting the energy transition

Episode Date: June 1, 2023

The energy transition is fueling skyrocketing demand for copper, an essential metal for renewables, batteries, and other climatetech. But supply isn’t keeping up. There’s more than enough copper in the earth’s known reserves to supply our growing demand for the metal, but supply is stagnating due to rising extraction costs and decades-long lead times to open new mines. A July 2022 report from S&P Global predicts that demand could begin to exceed supply in just a few years.. Without action, a growing supply gap could last into the 2050s, hampering the speed and scale of the transition. What can we do about it? In this episode, Shayle talks to Cristóbal Undurraga, the CEO of copper mining technology company Ceibo. They talk about the causes of stagnating supply and the technologies that could help increase production.  They cover topics like: Energy usage and carbon emissions in copper supply chains The limitations of scrap recycling to meet growing demand The geopolitics of copper supply chains, including China’s major role in smelting The pros and cons of the two major copper extraction methods – concentration and electrolysis The two major types of ore – copper oxides and copper sulfides, and why one is so much harder to mine The long lead times to build new mines and why constructing new ones isn’t easy Ceibo’s approach to increase mine capacity using novel electrolysis technology for copper sulfides Recommended Resources: S&P Global: The Future of Copper The Economist: Copper is the missing ingredient of the energy transition Bloomberg: The Green Energy Transition Has a Chilean Copper Problem Catalyst is a co-production of Post Script Media and Canary Media. Support for Catalyst comes from Climate Positive, a podcast by HASI, that features candid conversations with the leaders, innovators, and changemakers who are at the forefront of the transition to a sustainable economy. Listen and subscribe wherever you get your podcasts. Catalyst is supported by Scale Microgrids, the distributed energy company dedicated to transforming the way modern energy infrastructure is designed, constructed, and financed. Distributed generation can be complex. Scale makes it easy. Learn more: scalemicrogrids.com.

Before we start, we have two events coming up in June that our East Coast and West Coast listeners should know about. On June 15th, PostScript Media is holding Transition AI Boston. It's a one-day conference in downtown Boston digging deep into the applications for artificial intelligence and the energy system. We're going to have panels networking and a workshop on chat GPT. Speakers include Priyadonti, the co-founder and executive director of climate change AI. Pamela Isam, who is the former executive director of AI and technology at the U.S. Department of Energy. Patrick Walsh, a general partner at National Grid Partners, and Savannah Goodman, the data and software climate solutions lead at Google.

So if you're in the business of energy and climate tech and a better understanding of AI is important to your job, you should come to the event. Again, downtown Boston, June 15th, our listeners, get a 20% discount. Follow the link in the show notes and use the code PSPOD 20 when you buy your ticket. And for those of you over on the West Coast, our friends at Canary Media are hosting their next live event in Seattle

on June 28th. It's going to be a good one. I can attest. I've done multiple events with Canary and Canary Live, Seattle is going to feature some of the biggest names in our industry like Amy Harder, David Roberts, Remez Nam,

as well as Canary's executive editor, Lisa Hymas. The venue is the legendary radio station, K-E-X-P in downtown Seattle, and you can expect some amazing panels and lively networking. Again, we've done multiple shows, with Canary. The Canary Live events are incredible, so go check it out. Canarymedia.com

slash Seattle to get your tickets today. Don't miss out on either of these events. From the studios of PostScript Media and Canary Media. I'm Shayle Khan, and this is Catalyst. Nobody wants a mine in their backyard for sure, but on the other side, everybody wants an iPhone or an electric car. And that's a tension that we will need to learn how to live with. At long last, I get to unload about my obsession with copper. Buckle up. When utilities need flexible capacity they can count on, they turn to Energy Hub. Energy Hub works with more than 170 utilities, coordinating over 2.5 million devices to manage 3.4 gigawatts

of flexibility, built for the moments when utilities can't afford uncertainty. Energy Hub builds and operates virtual power plants that utilities actually stake their grid planning on, coordinating EVs, batteries, thermostats, and more through a single platform built for utility scale. Predictive, verifiable, and designed to perform when it counts. Learn more at energy hub.com. Trillions of dollars are flowing into clean and critical infrastructure, but those investments aren't driven by technology alone. They're shaped by markets, by policy, by capital, and by the institutions that connect

them. I'm Alfred Johnson, CEO of Crux, and host of a brand new podcast, Critical Capital. Each episode, I talk with people deploying capital, shaping policy and building the clean economy. Tune in as we unpack how progress is actually made. Listen to critical capital on Spotify, Apple, or wherever you get your podcasts. I'm Shale Khan. I invest in revolutionary climate technologies and energy impact partners. Welcome. So copper is the, quote, metal of electrification.

At least that's what the famous energy historian, Daniel, Eugen calls it. His firm S&P also recently put out a, I think, fairly scary report about potential looming shortfall in copper supply and said, and I quote again, unless massive new supply comes online in a timely way, the goal of net zero emissions by 2050 will be short-circuited and remain out of reach. So I read this paper by S&P when I was in the midst of an already growing obsession with copper that kind of overtook me over the past 12 months or so. Basically, we need copper badly in the energy transition. We need it for transmission lines in solar and wind projects, three to five tons per megawatt, actually, and especially in EVs, like really in electric

vehicles. They use like two and a half times as much copper as a traditional internal combustion engine vehicle does. So as we decarbonize and electrify, we're just going to need a lot more copper. And right now it seems pretty clear that that new supply is going to be really difficult to find. It's not that we don't have enough resources. We have way more than enough copper resources in the world. The problem is that we're not really adding enough new mines and that existing minds have declining production. It's this kind of slow-moving train wreck. And it feels like now is just about the right time to try to avert disaster. I've found that in climate tech circles, we talk a lot about lithium and nickel and cobalt these days, the battery minerals, especially.

especially, and for good reason, because for all of those, thanks to batteries, demand is growing really, really fast. But just to contextualize the scale of the challenge here, we mine around five times as much copper as we do those other three minerals, lithium nickel and cobalt combined. So the culmination of my copper obsession is an investment that I made at EIP and that we just announced this week into a company called Sebo. Christobal-Underaga, the CEO of Sabo is Chilean, you'll understand why that makes a lot of sense soon, and has been involved in the mining industry since he was, I think, 10 or so. So there's no one better to help us understand what the challenges in this market and what we might do about it. Here's Christobal.

Christoval, welcome. Hi, Shail. Thank you for having me. Let's talk about copper. So starting at the highest level, why do we care about copper? Like, why is it an important industry? Copper is a huge industry, and it's a very essential material to, everybody's daily life. So copper is almost in everything we touch and use on a daily basis. Anything that is electronic has some percentage of copper in it. When you move transportation,

when you drink water in your house, copper is an essential material to the modern life. All right, so copper is really central to modern technology, modern economy. We'll talk more about different ways in which we use it. But actually, let's talk about it specifically in the context of the energy transition and decarbonization. Because copper is important not just for things that we care about as we mitigate climate change, but it's particularly important for things we care about as we mitigate climate change.

And I think that's part of the driver for why we should care even more about copper over the next few decades. So why is copper important in that context? Yeah, so that's absolutely true. So, yeah, copper has become sort of cool and one of the hot metals lately. It wasn't some years ago. It was just another raw material or base metal. As the world wants to move more on electrons rather than on carbon molecules, you need a lot of wiring materials and copper basically to help those electrons first be produced

and then let them flow. So 45% of the copper in the world is used in the grid, or electricity or any application that it's either in the production or the transmission of electrons or the use of those electrons. So when you think of moving to a green economy or electromability, you will need an enormous new amount of copper for electric cars, for charging stations, for wind turbines, for solar panels. All those need copper.

and if you want to have more of those, then you will need more copper. All right, so let's define that then. How much copper, we'll talk more about how much we will need, but how much copper do we produce today, and where does that production generally take place? The general number is that the world consumes roughly 28 to 29 million tons of copper a year. Of those, something like 5 million, 6 million come from recycling or scrap or there's a recovery of copper round that helps you.

But in general, what is produced is going to be about 22 million tons of copper per year. That's like the rough figure of copper production in the world, all over the world. The main producer of copper is Chile, and I'm Chilean, and we're based in Chile as a company. And Chile produces roughly one-third of the copper. Peru produces another 10% of the copper. and the rest of the Americas, that's U.S., Canada, Mexico, produce roughly another 10% of the copper. So our continent is by large, the largest producer of copper.

Is that a function of just where the resources are? Does Chile have the largest known resources for copper, or is it some relic of history that drove Chile to be the largest producer? Oh, it's nature. Nature left us a lot of copper as a legacy, same with Peru and Mexico, and also in the U.S. So the U.S. has one of the largest mines in the world in Arizona, Morenese. It is what nature gave us.

There are other parts of the world that also have important reserves of copper and have natural resources, rich in copper. It is, so it's a function of yes, nature, but also of political stability and how you access to those minerals. And what's the rule of law that would allow you to make an investment for the next 50s? or 60 years, how certain are you that you will be able to make that investment, that investment will still be yours when it's operating? So it's a function of two things. One is natural resources and then sort of the political or economical context that will allow you to extract and produce that copper. So let's talk a little bit about the kind of structure of the copper industry and maybe the value chain that it has. So as you said, you know, we produce

a lot of copper in the Americas, particularly in Chile and Peru and to less extent the rest of the Americas, who's doing that production? Like, who are the major producers and how distributed is production amongst different players versus centralized? You know, are there three copper companies in the world or is it a thousand? And then we'll talk a little bit more about like the value chain. What happens after you mine it? So the copper industry is concentrated.

and some very large players, and those are going to be companies that maybe for a lot of listeners are not very familiar, BHP, Rio Tinto, Freeport McMoran, Valé, those are very large mining companies in the world, and they have significant outputs of copper. The largest producer of copper in the world is, there's a tie. So last year there was a change in the ranking. It was usually was Codelco, which is a state-owned company, a Chilean state-owned company. Codelco was the largest produce of copper, and last year, Freeport came on top of Codelco for a few tons. But those are two large companies producing copper.

And there's, so there's like Tier 1 companies, and they're Tier 2 companies. Tier 1 companies will produce amounts that are going to be close to a million tons, maybe up, to 1.5, or even a little bit more in the case of Codalco, BHP, down to a million tons of copper. Then you're going to have companies that produce in the realms of between 100 and a million tons of copper. And then you have many small companies all over the world, spread it all over the world, that are smaller productions. And what maybe people have in mind as a copper mine or is a small mining town, companies that will produce somewhere like 5,000 tons of copper per year, up to 20,000 tons of copper per year. Those are very common. What you have an anomaly is in

the case of Chile, and this is due to geology. You have very, very large mining companies, very large assets. So Escondida, which is the largest copper mine in the world, produces all by itself a million tons of car a little bit more than one million ton of copper tons per year. That is roughly all the production of the U.S. just produced by one asset. Then the second largest copper mine in the world is Koyahuasci, and there's 600,000 tons, also in Chile. And so you will find anomalies around these very large assets, and those tend to be in Chile, Peru, and in the U.S. So Morenzi is a U.S. company based in Arizona that produces 500 tons, 500,000 tons of copper per year. But after those very large top 20 companies, you'll see the output per mine to decrease to a reasonable level within the mine industry.

So just to clarify, so you've got Freeport, which is a U.S. producer, is basically tied with Kodelko for largest overall producer, but the largest individual mines basically are all in Chile. Yes. So Freeper produces in the U.S., mainly in the U.S., and also in Chile, they also have assets in Chile. But the largest asset is Escondida, which is owned by BHP, mainly by BHP, and it's definitely operated by BHP. So also what happens in this industry,

assets are so big that they're owned by several groups and operated usually by one of them. So BH Escondida is operated. by B.HP and it's owned by a group of investors. The same with Koyawesi, and it's operated by Koyawesi. And then every asset will have different owners, but it's operated by one company. Okay, so let's talk about what happens to copper mineral after we extract from the ground. So we've been talking about mining so far, but mining copper is not the end of the value chain.

So what happens after we extract copper from a mine? How does it get from there into, oh, I don't know, a wind turbine? or transmission line or whatever it might be. Well, that is a long route trail. They're basically two kind of mines. One are subsurface mines or tunnels, huge tunnels that's like a whole city that occurs underground. And then you have open pits. What happens is once you get the rock out of the mine and you do that by rock fragmentation,

which is using explosives, you will take it to the plant with this huge truck. So it's interesting the size, let me just stop there. The size of the industry is so, so huge. The trucks are trucks that move 300 tons of material. And when you stand by one of these trucks, the wheel can be four meters tall. Just the wheel of the truck, three to four meters tall. So the dimensions here are huge, huge, huge.

It's a little bit like an avatar in this movie years ago where they have his mines and somewhere in the space. The size is just huge and the volumes are huge. So once these rocks are taken down from the pit, they're transported in these huge trucks. They go to a plant where they have to be crushed. So when a rock comes out of a mine, you will see a rock that can be a meter wide.

and in order to process it, you need to reduce the size of the rock to different sizes, and the size will depend on the process you use. So generally speaking, there are two processes. One is going to be a hydrometallurgical process known as leaching, and the other one is the concentration. They start the same way. You take the rock from the mine, and then you crush it. And the case of leaching, the way this works is you irrigate the rocks with a solution that will chemically extract the copper from the rock, and you will get a liquid, it's a solution, it's a permeate liquid solution, that is rich in copper ions.

Those copper ions flow in the solution that is taking to an electro-winning facility. where basically through electrolysis you will capture in a plate, the copper ions, and create a copper plate. In the case that you go through the concentration, what you do is you take this crushed rocks and we go back to the crusher, then we mill it, we grind into very thin powder, and what we'll do is we'll try to float the particles that are rich in copper. And what you basically are trying to do is to concentrate it from a very low ore grade up to 30%. And that is taken, you dewater it and you get a 30% concentrate, and that is taken to a smelting facility. Smelting facilities, and most of the cases in the world are outside the mine or somewhere. And it's actually concentrated, and we talk about later in different regions of the world.

then what you'll get is a copper bar and that copper is 99.9% copper and you need to refine it up to 99.99 and you do that through electrolysis again. So there are two, this is like a fork with two large processes. One is hydrometallurgical where you irrigate and extract copper ions in a solution. And the other one is you concentrate it into a concentrate with 30% and you smelt that and from the smeltary. you refine it into a final copper cathode. So I think the distinction between these two processes is important. We'll talk more about it in a minute. But I do want to talk about the results of these two different processes as it pertains the value chain and the geography.

Because we've talked about where copper is mined. We haven't yet talked about where it is refined, which is what these two processes are all about. So how does it differ if you're doing the hydrometallurgical process versus if you're doing concentration flotation? Well, that's a great question, and it poses one of the challenges from a geopolitical perspective. So let me go to the end of the value chain. Who consumes the copper in the world first? So roughly China consumes 12 to 13 million tons of copper per year.

The U.S., around 1.8 to 2 million tons, and then Germany, Japan, and developed nations consume roughly a million tons per year of copper. It doesn't mean that China consumes all the copper and is. States and in China, it is used to products that then end up in different parts of the world. That's sort of how it ends in the value change. Before that, in terms of production, the hydrometallurgical process allows you to have on-site a process that produces a final catholic copper of 99.99% of purity, which is the final product A grade, which is traded in London Metals Exchange.

that's sort of the standard commodity is that contract for copper. In the case of the concentrate, most of the concentration occurs off-site, and roughly 50 between 45% of the smelting capacity in the world. So companies that purchase the concentrate and smelt it are in China. And there has been a lot of discussion around basically that China without producing necessarily a lot of the copper concentrates and has a lot of power when it comes to the copper market. Let's talk about some of the other differences between the two pathways, particularly with regard to, I guess, cost.

What does it cost to build the refining capacity in either context? And then environmental impacts, which I know differ a lot as well. Yeah, so the processes are very different. Let's go back. You crush it. And after what you crush is the difference between hydrometallurgy and concentrate. So, and I make the distinction because from a greenhouse gases perspective, the mine itself is one of the main sources of greenhouse gases. So regardless of what route you follow, there's sort of a base level of greenhouse gases attached to the mining process itself.

the difference then come in hydrometallurgy you use water to irrigate it you don't use a lot of greenhouse gases in that process water is recovered or part of it is lost through evaporation and the rest is recovered and you recirculate as much as you can because you want the water bottles because you want the ions that are in the solution and part of the chemicals

that you already used the next step is getting the plate of copper and there you need energy one of the interesting things and this is i guess mother nature again a lot of the copper mines in the world are in places with high solar radiation so there has been a transition in terms of moving to cleaner sources of energy for the electro deposition or the electro-winning process itself. So the carbon footprint has been reduced as the energy grids in the world are moving more towards renewal energies.

The concentration process, let's go back to the, after the crushing, you go to the milling. It is a fact in engineering that the more you need to crush the particle size, the more energy will need per volume of a size of particle. And so you will need energy, there in communication and to get it

to a small particle size. And then you will need water because the concentrate moves in an aqueous medium. That's the way you pump it, you move it through the process. And that requires energy. Pumping water requires energy.

And then you also need energy for the dewatering process and for storing what it's not used. And we haven't talked about the ore grades. And it's important to bear in mind that ore grades

are below 1%, so which means that non-copor is 99% of a piece of ore. And so you need to dispose the material you're not using in the flotation and the concentration. And those become tailing dams.

And tailing dams, you need a little bit of water to set there still and also to get, to move the mineral or the the crush ore needs to go to the tailing dam. And you do that in the form of an aqueous solution or some slurry, basically. And so at that point, you need more water for the concentration process than for the

leaching process. And then you need to ship a concentrate. So you don't ship a pure copper. You ship something that is a bulk material that has 30. 30% of copper. So you have three times at least more energy to move that amount of copper if it's in a concentrate and if it's a pure copper plate. You need to ship it and then you need to smelters are these huge facilities that have some pollution issues. In the case of copper, because it's an exothermic reaction, it doesn't require that much energy. I don't want to

charge that process with more. more environment that it already has, but it does release sulfur SOX, which are recovered and produce sulfuric acid, which goes back into the process. Ship again back to the source. And then there's an additional refining step in electrolysis, which also requires energy. But it's much more efficient because you're starting with a very pure copper anode. Anyway, so those are the impacts, the sources of the impacts, in terms of of environment of these two processes. Virtual power plants are becoming a reliable way for utilities to manage capacity,

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or wherever you get your podcasts. Okay, so high level, just to summarize it, between the two processes, concentration, which is the pyromatological route, is overall higher energy consumption from a variety of different parts of the value chain,

overall higher water consumption, overall higher emissions. That's right. And then the, I guess the other, important point of distinction between the two, and then we should transition to talking about what the challenges in the copper market in general and why we care about new solutions to extract more copper. But final question on pyro versus hydrometalogy is the cost side of it, because there's a fairly different capital investment required to build new refining capacity in each of those two contexts,

right? Yeah, absolutely. So yes, it has a higher impact concentration than leaching or hydrometallusory, the capital cost to build a concentration plant is huge. So we're talking investments that are usually in the realms of billions of dollars. And you need an important sort of geological, let me stop there and make a geological comment, minds usually start processing the surface. And in the surface, you will find oxides. And so there's a technical distinction of what can be processed through hydrometallurgy and what can be processed through the concentration. And we haven't talked about that. And this is really important distinction because it has to do with the evolution of a site. So mother nature has done a lot of work

for us. One of them is that copper naturally will form or form millions of years ago attached to sulfides. But as it has been exposed and weather out, it has converted by being exposed to oxygen to a copper oxide. So in the surface of the earth, you will find copper, usually in the form of a copper oxide. And as you start digging deeper and deeper, you will get to copper sulfides. And the way you process them is different. So you will use an hydrometallurgical approach for copper oxide, and you will use a concentration approach for copper sulfide.

And that's what sort of has divided the minerals and the processing technologies over time. Today, about 80% of the copper is produced through concentration because it comes from copper sulfides. And only 20% comes from copper oxides and those are processes through hydrometallery. And that's a very important distinction because what usually happens is that a mine starts with this, the surface, so the crust of the earth. And you will get a copper oxide. They will build in hydrometallurgical facility. And then as the company starts reaching into sulfites, the recovery rates will decrease. And that's when they need to think of, oh, now we need to build the concentration plant. And that's where the ticket gets really high. So building a leaching

facility is not super expensive. It is an investment. Everything in mine is big. Remember, we talk about huge trucks. Everything is huge and also investments are huge. But they're kind of reasonable within the corporate industry. When it comes to, and it becomes challenging is when you need to move to a concentration plan. That's when you see tickets of billions of dollars. And also you need more water now.

Because water consumption is higher, you need to review your permits on water. Now you need to do a tailing dam. So you need a new permit for attaining them. And that's when it's tricky for companies and it becomes a very, very challenging to transition from a copper oxide mine to a copper sulfide mine. Okay, so we're going to come back to that important distinction between sulfides and oxides when we talk about SABO, your company, and what you're doing. But first, let's talk about what the challenge is for this industry. So we obviously have a very mature industry. We've

been mining, extracting, and refining copper for a very long time. It's a big industry already today. We could see out in front of us that I think all expectations are that demand will grow, both because we'll just see general economic growth, but in particular, it'll grow faster because of all this electrification that we're doing globally. And beyond that, we know that the world has plenty of copper reserves. Like, nobody's arguing that we're going to run out of copper in the world. So why not just build more copper capacity? Why not just build more mines? Why not just increase production at existing mines? Like, why is this a challenge? Well, you mentioned that it is really important. So copper has

the copper demand has two forces. One is economical growth. So just pure progress. And that already increases copper demand historically by about 2%. When you produce 20 million tons of anything, 2% means

you need to add 400,000 tons of copper per year. That is a lot. Shale, that is a lot. So half of the Australian production per year. That's just to have that just to leave that number. Then you add electrification and a green energy and a green economy, and the number really jumps. So different estimates suggest that the world is going to run short

on copper and we're going to need an extra 5 to 6 million tons of copper just for the energy transition. So we have natural growth of copper demand plus the 6 million tons of copper. And pretty quickly, you get to the expectation that copper will need to double its output in the next 20, 30, 40 years. The number there depends on the report you read, but generally speaking, the idea is that the copper demand will double in the next decades or so. It's challenging when you start to think where are you going to get this copper from. So remember all the, well, we talk about developing and assets. So getting to a plan, you need to first explore, you need to first explore, you need to develop it and you need to build it and operate it. That process takes a lot of time and resources.

And so it's a very lengthy process just to get to a project and then it's very expensive to build a project. And you need the permits. So in order to get to double the amount of copper in the world, you will need an enormous amount of mines and an enormous amount of investment if you want to double the output of copper, let alone if you have those assets available. So yes, there is copper in nature, but it's in forms that are more challenging and more expensive to produce. So when mine started, or industrial mine started 100 or so years ago, the ore grade, this is the amount of copper you would find in the ore per ton was roughly 4%. You would have a lot of mines that would have even 6%.

So we mentioned Morenci or Escondi, these huge assets in the world. When they started, they were 2%. Today, those mines are operating below 0.5 or 0.6%. So for the same amount of copper you want to produce, you need to multiply by three times the amount of ore you need to handle. So it's becoming a really challenging industry because of the degrading ores. The second part is, as you get deeper and deeper and deeper,

you're getting to formations, minimal formations that are rich in copper that are more challenging and more refractory to traditional processes. And that's where concentration has an advantage relative to the traditional way that copper has been leached for oxide. So the rule of thumb is that you can leach an oxide, you cannot leach a sulfide. And that's why a lot of energies being put on how can we use traditional leaching infrastructure and processes for producing sulfides.

Because remember, degrading ores and more refractory minerals will demand for a lot of investments in concentration plants and bigger mines and being a processing unit, bigger tailing dams, and more water and more energy. So it's an industry that is on its push, it's stressed on the demand side by progress and a green economy and energy transition. And the other side from the production side is stressed by degrading ores and changes in the minerals. Right. And in addition, I mean, you sort of made this point, but one of the things that has been striking to me is that we have pretty good visibility out for the next, I don't know, 10 to 15 years on new minds. capacity because that's how long it takes to get a new mine built. In fact, sometimes it takes much longer than that, right? From the exploration to production process can be 20 years or more in

some cases. So we kind of know what's coming in terms of new capacity. And there's some coming, but it is clearly not enough as it appears today, partially because of what you described, that it is a lengthy, expensive, and most important, probably really, really difficult to permit. process in many countries that are large producers now. Absolutely. Yeah. So I was reading the other day as statistics published by the U.S. I think it was U.S.GS, but in the 50s it would take five years to get a permit. Today it's getting 17 years to get a permit for mine. And you'll see that all over the world. So it's not only the U.S.

It's not only a developed nation problem. I think this is a more general topic for all natural resources industries that the world wants to benefit from the resources. It could be minerals, it could be pulp, it could be cattle or food, by the other side somewhere they have to be produced. And today the world has more visibility on what happens where, so nobody wants a mine in their backyard for sure. but on the other side, everybody wants an iPhone, or an electric car.

And that's a tension that we will need to learn how to live with. But it's absolutely true that in order to get that copper or any base metal, we will need more to get creative on how we're going to get it. Because if we follow the traditional path of exploration, development, permitting, and capital investment, we just won't make it. If the estimate is that we need to double it, let me put it in another way. The amount of copper that will be required

in the next 30-year shale is roughly the amount of copper that humanity has produced all over history. Which might be okay if there's a data or YouTube or any industry. So data created in the world grows by roughly 25% every year that's okay you can handle that you cannot handle 25% increase in anything in the material world so copper growing 3 to 4% we're just not prepared for that okay so let's get to how you're hoping to help solve that problem

and i think we've sort of alluded to it a bit which i'll i'll try to restate a bit of this challenge then you can talk to me about the solution which is so we've got we've got pretty good clarity into the kind of medium-term future wherein there's a supply crunch coming for copper. Lots of demand growth, but meanwhile declining ore grades at existing mines and just not enough new mines getting built. So we've got this supply crunch coming. That said, lots of existing mines do have much more copper beneath their surfaces than they have already extracted. It's not that they are running out of copper either, though the ore grades are declining. And so wouldn't it be great if we could just extract more from the existing mines. One of the challenges that you've already described that these

mines face is this transition as you get deeper and deeper into the mine from oxides to sulfides, ultimately to primary sulfides, which is you started with oxides. They were higher or grade generally. You could use your leaching process, which is easier to permit, less expensive to build, cleaner. You could extract it. Then you keep getting down further and further. And at some point, you start to hit more and more of these sulfides. And if you want to extract the sulfides, at least historically speaking, that means you've got to go to the concentration route. Concentration requires a whole new set of permits that are hard to get billions of dollars of CAPEX. This is why a lot of this stuff has ended up in China.

So now you have a geopolitical challenge as well. So that's the issue that many, many minds that have been around for years, for decades even, are facing. So what do you do about that? Well, there's a lot of things in there that we need to do. What we have at SABOR, our company, we've been working on, is how can we try to use the hydrometallurgical process, this is a leaching process, to keep extracting copper, keep using those assets and that infrastructure that is already in place to produce copper using sulfide ores.

Again, so leaching was, we said, was used mainly for oxides. and as you start getting sulfides, the recovery you will get will fall. What our technology is aims at is keep using that infrastructure you have for oxides for very rich sulfide ores. And the results we have suggest that we're capable of extracting significant amount of the copper and sulfides into the leaching process. so you can keep using that infrastructure.

So the 4 million tons of capacity in leaching infrastructure in the world are not lost. And that is really relevant. So to get to the amount of copper that the world will need, you will need many strategies. But at least one strategy should be to use the assets and the infrastructure we already have. So Artin-Lon-G what does is use the existing infrastructure to, keep those companies open, producing, although their ores are changing because the ore's are degrading, but also because instead of oxides, now they're getting sulfides. More importantly, the sort of holy grail of the mining industry is being able to leach

calico pirate. So chalcopirate is a formation that is very refractory to leaching. And that's where also our terminology has proving very positive, results. And it's relevant because Chalco Pirate roughly holds 70% of the planetary reserves of copper for the future. And that enables not only the existing assets to stay alive, but also it can feed potential new assets or new green fuel projects based on our technology and not based on the traditional concentration plan and the way. water it needs, the permits it needs.

So it's one of the strategies the world can adopt to, first of all, keep the current output and then increase the output with new assets. One of the things about the mining industry, as I've learned about it, that is actually not dissimilar from the energy industry, is that you might think on the outside that there's a simple, fairly straightforward metric or set of very simple metrics that you would need to hit. And if you can hit those metrics, then you have a solution that works in the market. In the context of energy, you might say, like, low-levelized cost of energy. That's the only thing that matters. In the case of copper, you might say high recovery is the only thing that

matters. But it's much more complicated than that. These are industries that are very complex, and the factors that determine success are more than just one simple, pure, how much copper can I get using this process. So maybe at the high level, like, what do you think of? What do you think of just as the checkboxes that you would need to check for a new technology to achieve success within an industry like copper mining or copper refining? As you say, it's very similar to energy industry. So just like levelized costs, there's a cash cost consideration. And mining companies are divided based on the quartetail.

They are located for the cash cost. So that's called the C1 in the industry. And that's really, really relevant. For two reasons. One is how much cash you make, of course, if the prices go up, but also what happens if the prices go down. And mining companies and the CFOs of mining companies are really concerned what happens when the price tanks.

Of course, they need to deal with the benefits of high price. But it's really relevant when prices go down because the fluctuations in historical prices of copper are ups and downs. But when you think of a new technology, that's one. So cash cost is one. The other thing that is really interesting, Shail, is how is it going to behave as the mine evolves? So you've mentioned it a few times. This is a very long-term industry.

So it takes time to start a mine, but also it takes time and decades to operate. So you start a mind with the idea that the project will last 30 years. Some have lasted 100 years. shorter but in general you will your aspiration as a mining operator is to have an asset that will operate for 20 30 years but you really don't know what's going to happen in a few years from now with your mineral so the oars are going to change this is not like you will find the same rock the same structure the same composites in a rock five years from now or a hundred meters or 200 300 300 meters below the surface as in the surface.

So it's extremely important, A, to be cost-efficient, but also to be robust for the changes and the ores. The geology of a mine is different as you start moving through the mine. And that's extremely relevant because whatever technology decision you make now and you get a permit for needs to be, you, useful in 20 years from now. So you start with an or grade that let's say it's 1.2. You know what change it might be 0.8, but not only is the ore grade going to change or go down, but also the compositions of the rock are going to change. So your process has to be capable of dealing with those changes. That's a very important consideration. Then you have environmental concerns. What's going to be

the impact greenhouse gases, water consumption, dust, whatever is relevant for the normal, like the local regulations, then you need to consider the permitting cycle. We've touched a little bit around permitting. Is this technology going to require a full new permit or can we sort of use the existing permits if the asset is open? And so those are considerations that are relevant. process side and then from the investment side is how much capital will you need to get this up and running and so there are many projects that might have interesting ores but are very expensive

because you need to build a very specific plant or you need to enable electricity you need to build the grid to get there the roads ports maybe um water system like pumping water from the sea the infrastructure that you need to get something in place is one of the considerations that you have to have in mind when you decide to pursue another project. So as a technology developer, we need to sort of place ourselves in that context and that decision-making process and see where we fit. And that's why as a technology, we've said that we need to be as cheap as possible. environmentally friendly as possible to have a positive impact relative to whatever other autonomy is and then be robust as the mind will change in time. Christobal, thank you so much for coming on and talking through this with me.

It was great. Thank you, Shale, for having me. Christobal Uduraga is the CEO of Sabo. This show is a co-production of PostScript Media and Canary Media. You can head over to canarymedia.com for links to today's topics. PostScript is supported by Prelude Ventures. The venture capital firm that partners with entrepreneurs to address climate change across a range of sectors, including advanced energy, food and ag, transportation and logistics, advanced materials in manufacturing, and advanced computing. This episode was produced by Daniel Waldorf, mixing by Roy Campanella and Sean Marquand, theme song by Sean Marquand.

I'm Shail Khan, and this is Catalyst.