New US law opens opportunities for Colombia to export copper and nickel – Sectors – Economy

With the introduction of green energy and the development of energy transition, The supply of critical minerals is becoming increasingly important in the manufacture of electric vehicles, solar panels, and wind turbines, among others.

Under this scenario, the implementation of 370,000 million dollars included in the United States Inflation Reduction Act for climate action emerges as an opportunity to boost Colombia’s supply of potential inputs such as copper and nickel.

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This is how an analysis of the Colombian American Chamber of Commerce (AmCham Colombia) will end on the occasion of the 11th anniversary of the entry into force of the Free Trade Agreement (FTA) between the two countries, where it found that the thematic coincidence between the Presidents Joe Biden and Gustavo Petro in favor of the fight against climate change opens an opportunity.

“There is a common interest between Colombia and the United States in the issue of climate change and the energy transition, where Colombia agrees on the urgency of energy transformation and the stimuli to the industry within the United States to produce goods that use clean energy allows Colombia can take advantage to export copper and nickel and attract investment that contributes to that process,” said the president of AmCham Colombia, María Claudia Lacouture.

Although US legislation seeks to cut the fiscal deficit through minimum taxes on large corporations, the focus on climate change is a priority and the largest in the history of the North American country.

From this framework, they are granting tax credits for the promotion of clean energyalong with incentives for the production of solar panels, turbines, batteries, and processing of critical materials.

According to the International Energy Agency, the Reduction of Inflation Act would achieve by 2030 that the annual generation of solar and wind capacity in the United States is multiplied by two and a half with respect to current levels.

Meanwhile, electric car sales they would advance seven times as much and the demand for essential minerals for clean energy technologies would more than double, particularly copper in volume terms.

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At the national level, the Mining and Energy Planning Unit (Upme) highlights that the geographical and geological factors of Colombia represent ample opportunities for copper and nickel exploration for the energy transition.

Although there is only one consolidated copper project in the country (El Roble mine), which produces an average of 40,000 tons of concentrate per year, the possibility of multiplying production by up to six times is still possible with the eventual approval of the Quebradona mining project in Antioquia.

Among the regions with opportunity are, mainly, the departments located to the north of the Andean and Pacific region, such as Antioquia, Chocó, Santander and North Santanderalthough also the Serranía del Perijá and Putumayo.

These territories are located within the so-called “metallogenic belt” that extends through the Andes mountain range in South America and whose presence has led mining initiatives in countries such as Argentina, Chile, Ecuador and Peru.

According to the US Geological Survey, copper and nickel production is highly concentrated and the main producers in the region are Chile and Peru. With data to 2022, Colombia ranks fourth in nickel production in Latin Americawith an average export of 38,000 tons per year.

The investment to La Esmeralda mining project in Planeta Rica, Córdobasuggests a growth of 0.87 percent in the annual production of said mineral, with a goal of 48,138 tons by 2030.

Copper stands out as transition potential

is USAcopper and its manufactures materialized purchases for 15,284 million dollars in 2022, a record higher than the average of 10,607.7 million dollars during the course of 2012 and 2022, according to figures from the US Census Bureau.

Now the copper ore imports and its concentrates followed an upward trend and accounted for 122.7 million dollars in 2022, standing 20.9 percent above the 101.5 million dollars reported at the end of 2021.

At the end of 2022, copper and its manufactures had imports of 932,866 tons in the United States, mainly in Georgia, Florida and Louisiana. Meanwhile, the copper ore and concentrate orders they were in demand mostly Alaska, Wisconsin and South Carolina.

By supply, Colombia ranks 41st in the North American market, with an amount of 530 tons in 2022, corresponding to 4.1 million dollars. Even so, according to the Ministry of Mines and Energy, Colombia has the alternative of being able to multiply its current production by more than twice of 40,000 tons of copper and became the third largest copper trading partner in Latin America after Chile and Peru by the year 2030.

(Also read: Cerro Matoso will be able to produce nickel for 15 more years in Montelíbano, Córdoba)

Nickel in mining production support

According to the US Census Bureau, the American import of nickel and its manufactures reached 4,453 million dollars in 2022, an annual growth of 65.6 percent compared to purchases of 2,689 million dollars reported in 2021.

In this line, the supply of ferronickel stood out as one of the main components in greatest demand and represented 371.9 million dollars in 2022, a level 14.6 percent higher than the 324.6 million dollars in 2021.

Throughout 2022, the US economy imported 105,001 tons of nickel and its manufactures, equivalent to an increase of 40.1 percent compared to the figure of 74,874 tons in 2021. The demand was particularly concentrated in Maryland, Pennsylvania, North Carolina and New York.

In terms of supply, Colombia is in position 28 in the United States supplier of nickel and its manufactures, totaling 180.3 tons in 2022, which contrasts with the data of 14.9 tons notified at the end of 2021.

However, ferronickel shows an advantage in Colombian production, occupying second place with 5,745 tons valued at 40 million dollars in 2022, only behind Brazil.

The only nickel mine in Colombia is located in the department of Córdoba and the largest open pit in the American continent, which forced an extraction of 41,800 tons in 2022, being an elementary factor in the possibility of manufacturing batteries on a large scale.

Tracing and incorporating the chain in Colombia will be key going forward

The Colombian American Chamber of Commerce (AmCham Colombia) highlights the advantages that the FTA between Colombia and the United States in terms of trade integration and investment attraction.

“Currently, the energy transition it responds to a matter of wide importance in US economic policy and suggests a favorable situation to forge a public-private relationship that allows taking advantage of the opportunities related to the extraction and processing of critical minerals”, said María Claudia Lacouture.

Although China is the largest supplier of critical minerals in the world, regional relocation trends, better known as ‘nearshoring’, make Latin America more attractive, especially Colombia, which has a robust Trade Agreement in the region.

“The United States continues to evaluate alternatives to reduce the Chinese mineral dependencywhere not only geopolitical factors affect, but also national security and the development of economic opportunities with close trading partners,” he added.

Added to the above is that in the Inflation Reduction Law there will be priority for countries with FTA, where Colombia will have a great advantage over other Latin American countries.

“The business fabric and the National Government act as crucial chips to boost US investment in the country regarding the extraction and processing of critical minerals. Balance the playing field, clear rules of the game and a accessible tax scheme for investment It will be essential to position the country’s value chain as an export platform in the fight against climate change,” said the president of AmCham Colombia.