Friday May 24, 2024

Capital suggestion: Oil of the future

By Dr Farrukh Saleem
August 27, 2023

The first oil well that launched the modern oil industry was drilled in Pennsylvania in 1859. Copper is the ‘oil of the future’. Copper is an excellent conductor of electricity. Copper is a superb conductor of heat. Copper is vital for energy-efficient technologies such as electric vehicles, solar panels, wind turbines, geothermal energy, cryogenics, robotics, hydrogen production, 5G, quantum computing, drone technology, biodegradable batteries and energy transmission systems. Copper is highly recyclable and retains its properties even after multiple cycles of recycling.

As the world shifts towards renewable energy sources, the demand for copper will increase to support the production of solar panels and wind turbines, which rely on copper components for efficient energy conversion. The transition from internal combustion engines to electric vehicles also requires significant amounts of copper due to its use in electric motors, charging infrastructure and wiring systems. The proliferation of data centres, high-speed internet and advanced communication systems also rely on copper. Smartphones, tablets and wearable devices also require a steady supply of copper. Copper’s antimicrobial properties have led to its integration into healthcare settings as well.

Reko Diq stands as a monumental repository of copper (and gold), boasting vast estimated reserves of 5.9 billion tonnes of ore, with a copper grade of 0.41 per cent. This treasure trove is projected to sustain mining operations for a minimum of 40 years, marking it as a significant global asset.

The Public Investment Fund (PIF) serves as the sovereign wealth fund of Saudi Arabia and ranks among the most substantial funds of its kind globally. Its total estimated assets of $776 billion underscore its immense financial stature on the global stage. The PIF is looking at investing its billions into three areas: clean energy, technology and sports.

Saudi Arabia’s Ma’aden is among the fastest-growing mining companies in the world. Ma’aden pioneered the mining industry in Saudi Arabia. In January 2023, the PIF and Ma’aden established Manara Minerals Investment Company to invest in copper ore, iron, nickel and lithium assets globally.

Barrick Gold stands out as a prominent mining conglomerate boasting 16 operational sites spanning across 13 countries. Notably, Barrick Gold is engaged in a joint venture with Ma’aden. What adds intrigue to their portfolio is the fact that they hold a substantial 50 per cent interest in the Reko Diq project, earmarking an impressive $10 billion for further investments. Adding to this, the PIF has expressed a keen interest in acquiring a multi-billion dollar equity share in Reko Diq. As reported by Reuters, Barrick clarifies that it does not intend to dilute its equity in the project; however, it does not oppose the possibility of the PIF acquiring the equity held by the Pakistan government.

A worldwide rush for copper is underway as industries and nations endeavor to secure dependable sources of this indispensable metal. Pakistan has the potential to draw in hundreds of billions. To capitalize on this opportunity, Pakistan should actively engage with proficient international mining firms, fostering partnerships and joint ventures. This strategic collaboration would yield three critical components: expertise, capital infusion and entry into global markets.

In the era of renewable energy copper’s significance shines. As a top conductor of electricity and heat, it’s crucial for energy-efficient tech like EVs, solar panels and data centres. With its recyclability and antimicrobial properties, copper’s role extends to healthcare. Reko Diq’s abundant reserves, Saudi Arabia’s strategic investments and global partnerships underline copper’s future importance. Pakistan’s entry into this dynamic landscape requires partnerships with mining experts, capital infusion and global market integration.

The writer is a columnist based in Islamabad. He tweets @saleemfarrukh and can be reached at: