The New Gold and its Unconventional Reserves

Utility Poles from the Ottawa Area

[Utility Poles from the Ottawa Area]

Barrick Gold’s recent bid to acquire copper miner Equinox Minerals suggests that the bullion giant sees copper as the new gold. Both minerals are currently valued at record highs.  The price of gold has doubled in the past two years on account of investor fears of inflation and political turmoil.  Copper’s rise is even more dramatic as, in the same two years, its value has tripled.  Copper’s ductility and conductivity make it an essential ingredient in electrical products like electromagnets, wires and circuit boards.  In playing such an integrated role in the manufacturing industry, copper has effectively emerged as a proxy investment in rapidly industrializing nations such as India and China.

Morenci Mine - Largest Copper Mine in the U.S.

[Morenci Mine - Largest Copper Mine in the U.S.]

We may see demand for copper may outstrip its supply in 2011.  As demand continues to rise 21 of the 28 largest operations have no room left for expansion and 2015 marks the date were many of the globe’s largest mines will be exhausted (Salon.com).   With this supply-demand imbalance many new mining projects have been slated for development.  South American nations such as Chile and Brazil are proposing new mining operations as are nations within Africa’s Copperbelt such as Zambia and the Democratic Republic of Congo.

[Abandoned Copper Phone Lines, image by Chris Gordon via Flickr]

[Abandoned Copper Phone Lines, image by Chris Gordon via Flickr]

 When we consider the price of copper against the price of fiber telecommunication cables, an entirely new type of mineral reserve becomes exploitable.  Andrew Cohill of Design Nine, a US telecom consultancy firm, states that the world’s largest copper reserve is in the United States and its already been dug out of the ground. Cohill is referring to the hundreds of millions of pounds of copper hanging on telephone poles across the United States.   On one hand there are the vast amounts of abandoned wires hanging from utility poles left by earlier economics where it was cheaper for telecom companies to lash new cables to utility poles without taking down the old ones.  On the other hand, the remaining active copper wires could also be up for grabs as the value of copper telecom cables is higher (and continuing to rise) than the steady value of fiber-based conduit. Other operations have also made this connection. In the past few years theft of hanging copper wire in the US has been on the rise.  Most notably three Colorado men were charged with stealing 20 miles of wire in October 2010! Interestingly, the copper price crisis could have a beneficial spin-off effect for many rural communities in the US.  As abandoned copper wire is legally/ illegally cleared away, previously unavailable pole space can be claimed by new telecommunication networks desperate to piggyback on existing utility pole networks.

Category: 
Resources

Add new comment

BLOG ARCHIVE

2009

December 2009

November 2009

October 2009

September 2009

August 2009

July 2009

June 2009

May 2009

April 2009

March 2009

February 2009

January 2009

Anal