About $250bn in investments is needed in the next five years to roll out new copper mines to meet demand, according to a report by the UN Conference on Trade and Development (UNCTAD).
The report by the UN’s foremost institution dealing with trade and development estimated that 80 new copper mines and $250bn in investment are needed to meet global copper demand by 2023.
The report comes as the world’s biggest mining companies are scrambling to secure copper assets before a huge market shortfall, putting copper at the heart of dealmaking activity in the mining sector.
Demand for copper is expected to surge more than 40% by 2040, driven by the shift to electric cars and solar panels as well as the growth of data centres and AI infrastructure.
However, more than half of global copper reserves come from just five countries, making the global mined supply vulnerable to trade tensions, supply chain disruptions and country-specific policy changes.
Additionally, developing a new mine can take up to 25 years, and tariff wars and declining ore grades are keeping copper in short supply.
The metal’s strategic significance and dwindling supply placed it among the biggest drivers of SA mining’s mergers & acquisitions last year, according to a report by consulting firm PwC.
Business Day reported that in the 12 months to end-June, SA mining recorded 32 deals worth almost $10bn (R180bn), a leap from $1.5bn in 2023 and $2.5bn in 2022.
The most polarising of these deals was Anglo American’s failed takeover bid by BHP, a saga that illustrated the intense competition over South America’s copper mines.
The Australian miner staged three attempts to take over Anglo’s coveted assets in Chile and Peru last year, with the proposed transaction valued at $49.8bn.
In January, Reuters reported that Glencore and Rio Tinto, two of the world’s largest copper producers, had also discussed a deal.
With a combined market value of about $158bn, the merger had the potential to be the largest yet in the mining industry.
The search for copper has seen some of SA’s major gold miners expanding their international footprints in recent years, with Harmony Gold acquiring the Eva Copper project in Australia for R4.1bn in 2022 while progressing its Wafi-Golpu operation in Papua New Guinea.
Last month, AngloGold Ashanti signed an agreement with Australia’s Kincora Copper that will see the miner invest $25m-$50m in copper exploration over the next seven years.
In 2023, Copper 360 acquired Nama Copper for R200m and the past three years have seen Jubilee Metals adding copper to its portfolio by launching operations in Zambia.
Deep-pocket Middle East firms have also been on the hunt for copper assets.
Sibanye-Stillwater’s hot pursuit of Zambia’s Mopani Copper Mine was derailed in 2023 after Lusaka chose cash-rich Abu Dhabi’s International Resources Holding (IRH) as the strategic equity partner for the asset, handing Neal Froneman a rare deal-making defeat.
IRH is a subsidiary of United Arab Emirates’ most valuable listed company, International Holdings Company, which has a market value of about $240bn.
While copper’s strategic significance offers opportunities for growth and dealmaking in the mining sector, the metal’s limited supply threatens to stall the global transition to renewable energy and digitisation, warned UNCTAD.
The energy transition relies on copper to support electrification. Electric vehicles, for instance, require three times more copper than internal-combustion engines.
Copper demand from data centres, which are expected to increase in processing capability and popularity thanks to the growth of data and AI, is projected to increase sixfold by 2050.
Additionally, tension between the US and China has heightened concerns about copper’s demand outlook, with China accounting for 60% of copper ore imports in 2023.
UNCTAD argued that copper is a test case for protecting the global supply of other critical materials. It called for streamlined permitting, reduced tariffs and regional value chains to bridge the gap.
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