By Siyi Liu and Mai Nguyen
BEIJING/HANOI (Reuters) – BHP Group’s proposed $39 billion takeover of Anglo American is a big bet on copper that could spark a rush into mining assets amid bullish demand prospects and Limited supply for a mineral essential to the energy transition is driving prices up several levels. -highs of the year.
Together, the companies would produce 10% of the red metal’s global output, cementing diversified miner BHP’s position as the top producer ahead of copper-focused Codelco and Freeport-McMoRan.
Thanks to its high conductivity and extreme corrosion resistance, the metal is used in everything from cars to power grids to building construction.
“The energy transition is only just beginning, and if electricity is the lifeblood of this revolution, copper is its veins and arteries,” said Peter Arkell, president of the Global Mining Association of China (GMAC ).
“There is no way existing mines can meet anticipated demand, which is why major mining companies recognize that copper must be a fundamental part of their portfolio,” he told Reuters.
Global consumption of refined copper increased by 6.7% in 2023 to 27.63 million metric tons, according to data from the World Bureau of Metals Statistics.
Global demand for refined copper will increase at a compound annual growth rate of 2.3% by 2028, according to London-based commodities research firm CRU.
This robust demand outlook is coupled with a surprisingly limited supply of copper concentrate this year, fueled by the December closure of First Quantum Minerals’ massive Cobre Panama mine.
Also in December, Anglo American reduced its copper production forecast by up to 210,000 tonnes for 2024 and up to 180,000 tonnes for 2025, citing lower ore grades and hardness at the Los Bronces mine in Chile , pushing analysts to revise their market balance forecasts.
CRU forecasts a shortage of 194,000 tonnes of global copper concentrate and a shortage of 149,000 tonnes of refined copper this year, and analysts have said they expect the concentrate deficit to widen over the next three coming years.
Goldman Sachs is even more optimistic, with the investment bank’s analysts predicting a shortage of 428,000 tonnes of refined copper in 2024 in a note released Thursday that also predicted prices would reach $12,000 per tonne during the year future.
This would represent a further 23% rise from current levels on the London Metal Exchange (LME), where the price has risen on strong long-term market fundamentals and speculative trading.
The LME’s benchmark three-month copper contract hit a two-year high on Monday at $9,988 per metric ton, up 15% since the start of the year, while the most traded contract on the Shanghai futures exchange hit a record high of 81,050 yuan ($11,184.25). ton on Monday, up 18% since the start of the year.
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Craig Lang, an analyst at CRU, said some mining companies are struggling to maintain production levels as mines age, which would encourage them to acquire other assets. It is also likely that smelters will buy stakes in the mines to ensure their supply, he added.
BHP said in a…
