Dealmaking in the copper space continues to gain momentum as geopolitical events add to global uncertainty. But one thing remains constant and that is years of underinvestment will culminate in a structural deficit in supply.
Record high prices reflect the tightness in the copper space, with the red metal on New York’s COMEX last week punching through US$11,500 ($18,342) a tonne and the London Metal Exchange price rising above US$10,000 a tonne.
Ole Hansen, Head of Commodity Strategy for Danish investment bank Saxo Bank, says the New York-traded high-grade (HG) copper contract surged to a record high on speculation that US President Donald Trump may implement tariffs on imports within weeks.
“The premium HG copper trades over London has reached 17%, helping to explain the major contribution of industrial metals to the BCOMTR (Bloomberg Commodity Index Total Return) — a sector that otherwise would struggle amid global growth concerns,” he says.
Mitch Thomas, CEO of junior copper explorer Solis Minerals (ASX:SLM), tells Mining.com.au consolidation has been a dominant theme, particularly among major producers looking to shore up future supply.
“We’re seeing increased M&A activity – especially in South America – as companies recognise the challenges in permitting and developing new greenfield projects,” he says.
“For juniors, this creates a strong incentive to advance high-quality assets to a stage where they become attractive takeover targets.”
Solis is building a copper portfolio in South America around its core tenements of Ilo Este and Ilo Norte and elsewhere in the Coastal Belt of Peru. The company currently holds 76 exploration concessions (some granted and some in the application phase) spanning 65,100 hectares.
Frazer Tabeart, Managing Director of Alma Metals (ASX:ALM), says the copper sector is experiencing increased scrutiny on the subject of consolidation, with the larger miners favouring acquisitions over greenfield exploration.
“BHP’s recent attempted acquisition of Anglo American, signals a trend where majors seek to secure long-term supply through established projects rather than exploring for new deposits,” he tells this news service.
“This trend is expected to continue as the permitting and development timeline for new projects remains long and capital-intensive.”
Alma is working towards a resource upgrade in the first half of 2025 and the start of a Scoping Study at its Briggs Copper Project in Queensland before the year is out.
Sam Spring, CEO of Kincora Copper (ASX:KCC), agrees this trend will continue but also start to flow down to earlier stage projects.
“We expect to see consolidation and M&A continue to increase, and into earlier stages of project development, as has been occurring in the gold sector off the back of strong cash flows and increasing margins, and good new copper projects are hard to find,” he tells Mining.com.au.
Spring pointed to BHP’s (ASX:BHP) recent $40 million earn-in agreement with Cobre as a prime example of this.
Gold major AngloGold Ashanti (NYSE:AU) also last week committed to move to phase-two exploration at four of Inflection Resources’ (CSE:AUCU) copper-gold projects after spending an initial $10 million on exploration in the Macquarie Arc of the Lachlan Fold Belt in New South Wales.
This gives AngloGold an initial 9.9% company-level stake in Inflection and the miner can now earn a 51% asset-level stake in the Duck Creek, Trangie, Crooked Creek and Nyngan projects by spending $7 million on exploration at each project over the next three years.
Inflection’s partnership with AngloGold has been the catalyst for a 130% share price hike in 2025, giving the company a market capitalisation of around $50 million – more than five times Kincora’s market value.
Spring notes that so far there has been over $335 million of similar earn-in and exploration deals with porphyry explorers in New South Wales.
These include majors like Gold Fields (JSE:GFI), Fortescue (ASX:FMG), Newmont (NYSE:NEM) and AngloGold partnering with juniors including private explorer Gold & Copper Resources and listed explorers Magmatic Resources (ASX:MAG), Koonenberry Gold (ASX:KNB), Inflection and Legacy Minerals (ASX:LGM).
Kincora has so far executed five asset-level deals unlocking over $60 million of potential partner funding for its earlier stage and non-core projects.
AngloGold, which is also a partner in Kincora’s Nyngan and Nevertire projects located in the Macquarie Arc, has spent over $14 million to date with Inflection and met its phase-one milestone in just over half the time allotted to the earn-in.
“This provides us great confidence in our project generation strategy and further expected asset-level deals being key value catalysts as exploration activities continue to ramp up,” Spring says.
Buying production stalling organic growth
The majors buying existing production is doing very little to help the dwindling supply of copper as demand continues to climb.
The Australian Government anticipates 3% growth in global copper demand in 2025 and 2026, primarily driven by expanding manufacturing activity, low emission technologies and data centres.
BHP estimates that the copper used in data centres globally alone will grow six-fold by 2050 – from around half a million tonnes a year of copper currently, to around 3 million tonnes a year by the target date.
That increase roughly equates to the combined annual output of the world’s four largest copper mines in operation right now.
According to BHP, a study of Microsoft’s US$500 million data centre facility in Chicago found it used 2,177 tonnes of copper, equivalent to 27 tonnes of copper for every megawatt of applied power.
Current copper mining operations are expected to provide just over half of the metal required to meet future global demand over the next decade. However, BHP predicts that these existing mines will be producing around 15% less copper in 2035 than what they produce now.
At the same time, grades are declining.
BHP says it expects between one-third and one-half of global copper supply to face grade decline and ageing challenges over the next decade, which will drive increased unit costs and the requirement for capital reinvestment.
To overcome these challenges and sustain their production profiles, the majors have been buying advanced exploration and development projects, or already operational mines.
Solis’ Thomas says the shift away from greenfield exploration in favour of acquiring de-risked assets is a reflection of both capital discipline and project execution bottlenecks.
“However, this approach doesn’t solve the long-term supply issue,” he notes.
“Without sufficient new discoveries, the industry faces a looming supply shortfall in the late 2020s and beyond. We need to see more capital flowing into exploration if the sector is to meet future demand.”
“Without sufficient new discoveries, the industry faces a looming supply shortfall in the late 2020s and beyond. We need to see more capital flowing into exploration if the sector is to meet future demand”
Pat Williams, Managing Director of Queensland-focused Revolver Resources (ASX:RRR), says it is “highly illogical” to ignore the exploration/discovery stage of the mine project development lifecycle.
“The industry knows that. What may change more obviously is a swing towards the producing companies providing a greater proportion of early stage funding via JV’s farm-ins etc,” he tells Mining.com.au.
Companies are also increasingly looking for opportunities for synergies between development projects and existing operations to hasten the path to market.
“What is emerging more commonly are new initiatives surrounding shared (processing/treatment) infrastructure – which can add a variety of additional value contributions to either underutilised fixed infrastructure and/or smaller satellite deposits which may not be able to justify standalone process infrastructure,” Williams says.
Revolver is advancing its Dianne Copper Project in Queensland towards a final investment decision in the coming months ahead of first LME-grade cathode output this year.
Earlier in 2025, the company received a $1.3 million grant from the Queensland Critical Minerals and Battery Technology Fund to fast track key technical and design workstreams for the restart of mining operations.
The Dianne Project previously hosted one of the highest-grade operating copper mines in the world, according to Revolver.
Recycling no ‘silver bullet’
Meanwhile, recycling of copper is playing an increasingly important role in helping address the looming supply shortage, but Solis’ Thomas says it is “no silver bullet”.
“Secondary supply from scrap is growing, especially in developed economies, and technological advancements in refining are improving recovery rates,” Thomas explains.
“However, with copper demand set to increase significantly, recycling alone won’t bridge the gap.
“The reality is that a significant portion of copper remains in use for decades in infrastructure and electronics, meaning primary production will remain essential.”
According to the World Resources Institute, recycled copper currently accounts for roughly one-third of the world’s copper supply.
The Massachusetts Institute of Technology estimates that by utilising advanced processing technologies that significantly improve recycling rates, over 5 million tonnes of copper could be saved from landfill each year.
But to fully realise that potential, recycling rates need to double from 32% currently to 66%.
Right now there are strong tailwinds behind the copper price and while there is short-term volatility, the long-term fundamentals remain solid.
Kincora’s Spring says COMEX prices are up over 10% since the US election and over 20% year to date.
He notes this has been driven by LME pricing following the COMEX price up due to potential US tariffs, reporting season downgrading near-term supply forecasts (again), positive Chinese macro data and physical demand, and, most recently, plans by China and Germany to stimulate their economies.
LME prices have rallied over 15% since the start of the year.
“The recent move in the copper price and current treatment and refining charges are suggesting there is still a tight supply-demand with potential supply side risks both on the positive and negative likely to result in a dynamic environment for pricing,” Spring says.
“The well documented longer term drivers remain very positive, particularly off a spot copper price.”
According to Spring, the COMEX price is just one supply disruption in the negative from establishing itself firmly in bull market territory.
Write to Angela East at Mining.com.au
Images: Mining.com.au, Alma Metals, Kincora Copper & Revolver Resources
