It makes No Sense to Give Tax Breaks

By Fred M’membe President of the Socialist Party

There is really no need to be in a rush to give away our minerals to foreign transnational mining corporations for next to nothing. Anglo American, Anglovaal, Glencore, Vendata and other mining corporations are interested in our minerals because there are gigantic profits to be made now and in the future.

The prices of copper and cobalt are set to rise dramatically, and so are their profits. Here’s why:

It takes 180 pounds of copper to make a Tesla or other electric vehicle. This is five times the amount of copper needed to make a combustion engine motor vehicle. It takes 450 pounds of copper to build a normal house, once you include electric appliances, wiring and fixtures. If you put solar panels on it that will take another 100 to 150 pounds of copper wiring. A solar farm used to generate energy requires five times the copper it takes for an equivalent natural, coal, or nuclear power plant.

1. If we are going to turn our cars into electric vehicles, we are going to need a lot more copper over the next ten years.
2. If we are going to build houses for all the millennials – the largest generation on the planet – we are going to need a lot more copper.
3. If renewables, such as wind and solar power, are used to build those things and supply energy then we are going to need a lot more copper.

This red metal is sometimes called Dr Copper because it has an uncanny ability to predict recessions and economic booms. The reason for this is that we unlikely to go into recession when we are in a building boom, whereas we are more likely to when we are not.

Industry, factories, homes, appliances and cars, all require copper, and that is never going to change because, if you look at the periodic table, you will see that there is no alternative to copper, except for silver. Silver conducts electricity better than copper but because it is so expensive it will never serve as a viable replacement. Plus, global copper reserves are estimated to be around 870,000,000 tonnes, whereas silver reserves are put at 530,000 tonnes.

Let us take this conversation further. Statistics show that 20 percent of the world’s population uses 50 percent of its copper; 13 percent of the population has no electricity; three out of four people on the planet – 75 percent – don’t have access to a car; so, if the 80 percent of the world that doesn’t currently use that much copper starts to do so as a result of increased energy needs – by buying appliances, electric cars, building houses and so on – then we will see a significant increase in the demand for copper. The price of copper, even though it has risen, will be so much higher when that demand increases.

And there is another factor. The EU has reacted to Russia’s war with the Ukraine by feverishly moving towards renewable energy, which, as we said above, requires five times the amount of copper as other energy sources. This will also spur the demand for electric vehicles. While recycling can meet up to 35 percent of current global copper consumption, we don’t have enough copper to recycle to satisfy increased renewable energy demands, plus, it takes a long time to bring copper mines online – around five to 10 years to market.

The upshot is that the demand for copper is going to increase significantly and so is its price. Under these circumstances, it doesn’t make sense to give tax breaks and other unnecessary incentives to transnational mining corporations. Why would we do that? We certainly would not be acting wisely. I can think of no reason why a government would do it, unless it was out of acting out of ignorance or corruption.