Copper Ore: Arizona’s Old Treasure-Today’s Top Export

Copper Ore: Arizona’s Old Treasure-Today’s Top Export
March 17, 2020
Vera Pavlakovich-Kochi, Ph.D.

Five C’s – copper, cotton, cattle, citrus and climate – have played pivotal roles in the early economy of Arizona. They attracted people and capital to the state and provided the basis for the early mining-agriculture-tourism economic nexus. Although the economy of Arizona has transformed into high-tech manufacturing and service industries, all five C’s are still on the list of Arizona’s export commodities. Exports of copper, cattle, cotton and citrus are customarily traced in the trade statistics. The “export” of climate is more difficult to pinpoint since it is intertwined with the impacts of other factors that bring visitors to Arizona such as national parks, resorts, shopping, and special events.

Copper ore tops Arizona’s 4 C's exports

It is worth noting that only those commodities that are shipped over international borders are recorded in trade statistics as “exports.” Thus, while Arizona’s 4 C’s are finding markets throughout the United States, only those that are shipped to foreign countries are counted as exports.

A dramatic rise of copper ore to its dominant position among Arizona’s exports of 4 C’s started around 2005 and since 2011 replaced cotton as the top C export. Exports of cattle and citrus have remained relatively low in both dollar terms and as percentage shares of C’s total. (Figure 1) The rise in copper ore exports is the main reason for the total exports of Arizona’s 4 C’s increase from $316.4 million in 2010 to $1.8 billion in 2019. [1]

Figure 1.  Rise of Copper Ore in Arizona’s Exports of 4 C’s

Source: USA Trade Online

Copper ore tops Arizona’s overall exports to the world

At the 4-digit Harmonized Commodity Description and Coding System (HS), used internationally in foreign trade statistics, the commodity is recorded as “copper ore & concentrates.” However, for the purpose of simplicity, in this article it will be referred to as “copper ore,” while keeping in mind that it is in the form of concentrates rather than in the form of bulk ore when exported abroad.

With overwhelming concerns for manufacturing exports in lieu of recent NAFTA re-negotiations and various trade wars, it is possible to overlook the fact that copper ore is actually one of Arizona’s top exported commodities. In 2019, Arizona exported to the world $1.6 billion worth of copper ore and an additional $251 million worth of copper products. This placed the copper ore at the third place among exported commodities behind the first-placed civilian aircraft, engines and parts worth $2.7 billion, and second-placed electronic integrated circuits worth $2.0 billion. (Table 1)

Table 1. Top 8 Arizona Exports to the World (worth more than $500 million), 2019

HS CODE

COMMODITY

$ MILLIONS

% OF TOTAL

8800

Civilian aircraft, engines & parts

2,682.3

10.9

8542

Electronic integrated circuits & micro-assembl. parts

2,007.5

8.1

2603

Copper ore & concentrates

1,626.0

6.6

8536

Electrical apparatus for switching etc.

829.6

3.4

8541

Semiconductor devices; light-emit diodes, etc.

726.6

2.9

8517

Electric apparatus for line telephony & parts

678.3

2.7

8802

Aircraft, spacecraft & launch vehicles

638.6

2.6

8538

Parts for elect. Apparatus etc.

500.9

2.0

 

Total 8 top commodities

9,689.8

39.2

 

Total Arizona's exports to the world

24,691.2

100.0

 

Mexico – the main importer of Arizona’s coper ore

Practically all of Arizona’s exports of copper ore go to Mexico. From $4.2 million worth exported in 2002, the value increased to a staggering $1.6 billion in 2019. As shown in Figure 2, the exports of copper ore increased with the recovery from the Great Recession of 2008, and in 2015 reached the peak of the decade. Accounting for less than one percent of all Arizona’s exports to Mexico in 2005, the copper ore increased its share to 12.5% in 2011 and by 2015 came close to 30%. Last year, the copper ore share dropped to 19.6%, which is still a remarkable one fifth of Arizona’s exports to Mexico.

Figure 2.  Exports of Coper Ore to Mexico: Comparison with Other Commodities ($ millions)

Source: USA Trade Online 

Copper ore profoundly impacts Arizona’s overall exports to Mexico

As suggested in Figure 2 above, the value of exported copper ore fluctuates more than is the case with the rest of commodities. With its substantial contribution to Arizona’s total exports, it is no surprise that the trends in copper ore exports profoundly affect the overall dollar value of exports. This impact of copper ore is more clearly apparent in Figure 3, where two sets of data are juxta-positioned; one showing total exports including copper ore and the other showing exports after copper ore is excluded.  Clearly, since the beginning of the 2010 decade, it has been the copper ore that contributed to the highest increase in exports in 2015, and it is the main cause of declining export values between 2016 and 2018. 

Figure 3. Impact of Coper Ore on Total Arizona’s Exports to Mexico

                     Source: USA Trade Online

Nogales, Arizona – the singular port for copper ore exports to Mexico

Two key characteristics define the Nogales port of entry in the context of copper ore exports. One is that practically all of Mexico-bound exports of the US copper ore are facilitated through port of Nogales, and the other is that basically all of the US copper ore exported to Mexico originates from Arizona.

Arizona is the principal copper mining state in the United States followed by Utah, New Mexico, Nevada and Montana.  In 2019, the United States exported $2.3 billion worth of copper ore worldwide, of which Arizona accounted for $1.6 billion or 69.5%. [2] Of the total US copper ore exports to Mexico, Arizona accounted for full 100%. Arizona’s proximity to Mexico is partially responsible for the current pattern of copper ore flows, but there are several other important contributing factors at play.

Multinational companies, Sonora’s port of Guaymas, and Southeast Asia

All ten leading copper-producing mines in Arizona are owned by global mining companies. The largest in Arizona is the Freeport-McMoRan company in possession of four largest mines, Morenci in Greenlee County, Bagdad in Yavapai, Sierita in Pima, and Safford in Graham, plus a smaller, Miami mine, in Gila County. The company accounts for about 80% of Arizona’s copper ore production. [3]   The ASARCO, a wholly owned subsidiary of Grupo Mexico, encompasses three mines, Ray in Pinal County, Mission Complex and Silver Bell in Pima County. [4] The company’s production accounts for about 13% of the Arizona’s copper production. [5] The Pino Valley mine and Carlota mine, both located in Gila County, are owned by foreign-based Capstone Mining Corporation and KGHM, respectively. [6]   

Arizona’s neighbor to the south, the state of Sonora, is a leading copper ore producer in Mexico as well as copper ore exporter.  Sonora’s port of Guaymas serves as the main port for exports from Sonora to China and other Asian markets. While comprehensive data are not available to assess what portion of Arizona’s copper ore might be exported to Asian markets via Guaymas, the available data indicate that copper ore is one of the top exported commodities through the port. [7]   For example, in January 2019, the top export commodity was copper ore (HS 2603) worth $35 million and the shipments were destined for China. [8]


[1] Reported at 4-digit Harmonized Commodity Description and Coding System (HS) level. HS is an international nomenclature system comprised of more than 5,000 commodity groups. Source: World Customs Organization,  www.wcoomd.org

[2] Source: USA Trade Online at 4-digit HS. https://usatrade.census.gov/data

[3] Data for 2018, Source: List of copper mines in the United States. https://en.wikipedia.org ; Freeport-McMoRan (FCX) https://www.fcx.com

[4] ASARCO Grupo Mexico. www.asarco.com

[5] Data for 2018. Source: List of copper mines in the United States. https://en.wikipedia.org

[6] Source: List of copper mines in the United States. https://en.wikipedia.org

[7] Basal reinforcement project: Port of Guaymas, Mexico, Dec. 5, 2015, https://www.geosynthetica.com

[8] Source: Export Genius, Guaymas, Sonora. Export data for January 2019, https://exportgenius.in/port-export-database/ ..