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https://www.fastmarkets.com/insights/copper-deals-frenzy-doesnt-resolve-supply-issues-andrea-hotter

It makes sense that copper is a focus metal for the current interest in M&A activity.

For several years, the sector has been highlighting copper’s role in the energy transition, which will require copper for use in renewable energy as well as the electrification of the grid and electric vehicles.

The problem is that few companies want to spend billions building a copper mine, particularly given that it typically takes more than a decade to do so, often leading to cost overruns and adding to their price risk exposure.

Miners have also been facing pressure to return profits to shareholders in reward for their patience as the sector has swung from toppy price highs to destructive price lows.

The solution, it would seem, is to go out and buy an existing mine – and its owner – instead.
While a round of M&A would likely benefit shareholders, at least in the short term, it would unfortunately not address the copper sector's supply issues. That’s because the world needs more copper units, not bigger companies to benefit from an anticipated price spike.

The fact remains that there are very few copper projects forecast to come into production in the coming months and years. Estimates that the world requires vast multiples of existing copper production will never be met unless the industry addresses the need to develop more sources of supply.

Ragnar Udd, the president of BHP Minerals Americas, says the world needs 9 or 10 of the giant Escondida copper mines in the next decade to meet the needs of the energy transition.




Cheers

These are only my thoughts and it does not constitute investment advice. Before acting on any information you read and before making any financial or investment decisions, you should always consult your advisor(s) or other relevant professional experts.