INTERVIEW: ESG compliance essential to mining success: Phoenix Copper

Environmental, social and governance compliance is essential for the mining sector to improve its standing with shareholders, Dennis Thomas, non-executive director and VP of investor relations at Phoenix Copper, told S&P Global Platts in an interview.

Thomas, who has been prospecting since 1984, said he had always had ESG on his radar and agreed that over the past couple of years the acronym had really taken the market by storm.

Phoenix Copper is a base and precious metals exploration company operating in the US state of Idaho.

Thomas said that over the years the mining sector had "been its own worst enemy." He added that ESG was essential for the development and reputation of the industry, noting Phoenix had a "clean bill of health" and no environmental red flags, and was also working alongside the local community to create sustainable projects he described as "win, win, win."

"People have to be ESG aware...[you] have to believe it...if [you're] using [it] just as a badge, then you'll get caught out," he said.

Thomas said the company's current focus is getting the Red Star mine up and producing copper by late 2021 or early 2022. The mine site also has lead, gold, silver and tungsten veins that can be mined. The VP described Phoenix as having the flexibility to bring metals on stream dependent on various market dynamics.

Copper outlook mixed

The copper price, like most commodities, took a beating after the coronavirus pandemic took hold. The London Metal Exchange copper price is currently trading at around $5,250/mt, having touched three-year lows of $4,371/mt mid-March after starting the year at $6,188.50/mt.

Speaking to Platts recently, LME's CEO Matthew Chamberlain said copper was being hit by a cut in production, as the world closes shop to slow the coronavirus pandemic, and also a downturn in demand. The world is looking at a fairly deep recession ahead, although it is unclear how long a pullback could last and how much damage it could inflict on the global economy.

Some are questioning the renewed strength in the copper price, prediction a sharp correction when the market realizes that the price is currently only being propped up by government aid.

It could take a number of years for copper demand to return to pre-coronavirus pandemic levels, with only government stimulus packages acting as any real demand support, according to brokerage Sucden.

Glass half full

Still, Thomas described himself as a "[glass] half full, rather than half empty" person, and that copper was grounded in solid fundamentals and the growing requirements from the rapidly evolving electric vehicle sector.

The industry veteran said too many people were overly pessimistic toward the sector, and that as the world emerged from the pandemic lockdown there would be an acceleration toward an electrified society.

"There have not been many major copper discoveries [in recent years], the easy stuff has been dug up...Copper is a strategic metal as far as I am concerned," he added.

Chilean industry group Sonami expects a copper surplus of 200,000 mt in 2020 amid lower demand for the metal due to the pandemic. The organization said supply and demand would both be dented as the world grapples with a global recession.