Orion Minerals extends R14m loan agreement with Anglo American fund

ORION Minerals said an R14.25m loan with Anglo American sefa Mining Fund (AASMF), had been extended to end-October.

The loan facility, raised to pay for a portion of the exploration and development of the Prieska Copper-Zinc Project, was to have expired on April 30. As of March 31, the balance of the loan facility was R20m, including capitalised interest.

Orion Minerals is currently raising finance for the development of the Prieska Copper-Zinc project, situated in the Northern Cape, which will require estimated capital of A$432m (R4.83bn). This project has been scoped for production of 20,000 tons of copper a year, and 70,000 tons of zinc a year.

In addition to the proposed A$58m (R649m) development of Okiep Copper Mine, which Orion Minerals is considering buying, total investment in the Northern Cape by the company will total about R6bn.

This will make Orion Minerals one of the largest investors in the province since Vedanta announced the R20bn, two-phase development of the Gamsberg zinc mine and smelter, of which only the first phase has been developed to date.

The price of copper has surged in recent weeks. Whereas price rises were largely driven by demand over the last 18 months to two years, the latest improvement is informed more as a result of supply-side concerns.

According to a report by Jefferies analysts last year, copper demand will “significantly” exceed supply with deficits set to blossom over the next seven to eight years. The multi-year deficits will drive the price of copper inexorably upwards.

Decarbonisation is a major factor in Jefferies’ assessment of increased copper demand. Copper plays a much greater role in the manufacture of renewable applications than in conventional fossil fuel power.

“We forecast copper demand in renewable energy to increase from 997,000 tons in 2020 to 1.9 million tons (Mt) in 2030 in our base case and to 6.4Mt in our bull case,” the bank said. Copper demand in renewable energy would fall to 343,000 tons in 2030 as per the bank’s base case scenario. Copper demand this year is estimated to total just over 20Mt.

It takes about seven years to permit and develop a new copper mine.