Gustavo Petro was elected as Colombia’s first leftist president on June 19, and he has promised to halt new gas and oil development.
But Colombia wants to be at the forefront of the world’s green energy transition, and a mining industry analyst believes that should benefit junior explorer Libero Copper and Gold Corp. (LBC:TSX.V; LBCMF:OTCQB) long-term, making this a good time to take a position.
“We believe Petro would have to acknowledge copper’s fundamental role in achieving this goal, which should benefit Libero Copper and Gold,” wrote Taylor Combaluzier of Red Cloud Securities Inc. on June 20, the day after the election.
As a result, Red Cloud maintained its Buy rating with the same target of CA$1.40 for the share price. The market over-reaction to elections may have created a tremendous buying opportunity, the company’s CEO said.
Petro has named economist Jose Antonio Ocampo as finance minister. Ocampo has recognized the importance of using resources like copper and lithium to combat climate change without hurting growth. Both elements are important to the electric vehicle (EV) industry.
The country is “realizing that dependency on the exports of coal and oil is not something that can be maintained over a long, long period of time,” Libero Chief Executive Officer Ian Harris told Streetwise Reports. “Colombia not only has an opportunity with its potential in copper to replace a sector in decline — but in order to achieve its goals of advancing a clean energy agenda and be a leader in that space, Colombia (must) seize the opportunity. The projection of a critical gap in supply and demand of copper combined with potential gives Colombia (a seat) at the table.”
Data from the Colombian Mining Association shows that mining could be worth $2.2 billion in taxes and royalties to the country in 2022, a 69% jump from 2021, Combaluzier noted.
“The resource sector is playing a larger role in Colombia as of late,” he wrote.
EVs Will Drive Copper Demand
The world is making the pivot to greener energy, and that future includes copper.
EVs as they are now would not exist without the red metal; they use three times the amount of copper as cars with internal combustion engines. One out of five vehicles sold worldwide could be an EV in less than two years, and Ford and General Motors have set a goal of achieving 40–50% of their sales from EVs in the U.S. by 2030.
This is expected to cause demand for copper to rise 16% and outstrip supply by more than 6 million tonnes by the end of the decade, according to independent energy research company Rystad Energy.
“A deficit of this magnitude would have wide-reaching ramifications for the energy transition as there is currently no substitute for copper in electrical applications,” Rystad wrote. “Significant investment in copper mining is required to avoid the shortfall.”
Libero is set to drill 5,000 meters at its Colombian asset, Mocoa, and 5,000 meters at its Big Red property in British Columbia’s Golden Triangle in August. It’s also working with authorities on permits to begin drilling at its Esperanza project in Argentina.
The company stated Mocoa, discovered in 1973 in the department of Putumayo, is the largest copper resource in Colombia. Results from the first diamond drill hole there returned 0.89% copper equivalent [CuEq] (0.62% copper and 0.083% molybdenum) over 557 meters, and the entire hole graded 0.58% CuEq (0.42% Cu and 0.047% Mo) over 1,229 meters.
“We believe this should help upgrade the existing ~4.6B lb Cu resource at Mocoa from the inferred to indicated category and could likely improve the resource grade,” Combaluzier wrote for Red Cloud.
Libero recently identified nine new porphyry targets at the site near the existing deposit at the site. “The geophysical and geochemical data suggest that Mocoa could be host to a clustered porphyry system, which could provide good potential for further discoveries and resource expansion,” he wrote.
The analyst also said he believes “Libero has potential to make an economic discovery at Big Red as it continues to vector towards the (center) of the porphyry system, where higher grades would be expected.”
Assay results are expected to start coming in from Mocoa within weeks of drills hitting the ground, and sometime this fall for Big Red. The company continues to work to get permits in Argentina.
Renewable Energy a ‘Done Deal’
It will take a change in the way the world thinks and looks at copper for its exploration and production to become a priority, Harris said.
He mentioned a recent conversation with an Uber driver who didn’t realize how much copper his EV used.
“I don’t think it really enters the consciousness yet of the general populace,” Harris said. “Electric cars need a lot of copper.”
The move to cleaner energy is not only better for the planet, Harris said, it’s also good for nations’ economies.
The transition to clean energy is expected to bring 10.3 million new jobs globally by 2030, the World Economic Forum noted in March. That increase will offset the 2.7 million jobs expected to be cut in fossil fuels.
“The energy demand moving forward is so big, we cannot continue down this route,” Harris said of the use of fossil fuels. “So, it’s a done deal. It’s something that’s going to be happening in some form.”
Libero Copper and Gold has a market cap of CA$15.4 million with 64.16 million shares outstanding. It trades in a 52-week range of CA$1.05 to CA$0.24.
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