Copper deal day hits with a flurry of M&A for the hottest metal
LONDON – "Everyone loves copper and everyone wants to buy it” has been this year’s mining mantra. Today the ball started rolling.
China’s Zijin Mining Group swooped on a huge undeveloped copper mine in Serbia, acting as a white knight to beat out an earlier hostile bid from a Canadian rival. At the same time, BHP Billiton, the biggest miner, snapped up a stake in one of the world’s biggest undeveloped assets. Glencore also increased its exposure to the metal with a new offtake deal.
The world’s biggest miners have all spoken openly about their ambitions to increase exposure to the copper, even as prices slid into a bear market. They’re taking the long-term view that the increasing electrification of transport and cities will lead to growing demand, while new supplies of the metal are constrained. Bloomberg Intelligence sees the market in tight balance for the next two years and probably moving into deficit around 2020.
Still, while there is desire to add more copper, there haven’t been many deals until now and the transactions today are relatively small. Many assets either aren’t up for sale or are in unattractive locations, said Liberum Capital Markets analyst Richard Knights. “Almost every large undeveloped copper body comes with very specific issues, from jurisdiction, being privately owned or already held by a major,” he said.
The biggest deal of the day was Zijin’s pact to buy Nevsun Resources for $1.41 billion. Nevsun solicited interest following its rejection of a hostile takeover by Lundin Mining, which had made repeated overtures. Nevsun, once a target for banker-turned-mining-fund-boss Lloyd Pengilly, controls the Timok copper/gold project in Serbia and the Bisha mine in Eritrea.
Earlier today, BHP said it had bought a 6.1% in SolGold for about $35-million. The miner has been pursuing SolGold for two years, but an earlier offer was rejected in favor of an investment by Newcrest Mining. SolGold is planning to develop the Cascabel project, which could become one of the world’s major copper mines, and has exploration ground across Ecuador.
Also Wednesday, Glencore announced a $100-million offtake deal with Brazilian copper producer Paranapanema SA.
It’s not just deals moving forward, but new mine developments too. Anglo American gave the green light in July to start building its $5-billion Quellaveco copper mine in Peru. Smaller rival KAZ Minerals has also recently unveiled plans for a new copper mine, paying $900-million for a deposit in Russia that could cost about $5.5-billion to build.
Rio Tinto Group, perhaps the miner with the strongest balance sheet in the sector, has also openly talked about expanding in copper, although CEO Jean-Sebastien Jacques told investors last month that the miner had to be patient to avoid overpaying.
“Everybody knows which asset I would love to have in the portfolio,” Jacques said, referring to the Collahuasi copper mine owned by Anglo and Glencore which Rio previously tried to buy. “But we’re not going to do anything stupid, absolutely not. We keep the watching brief.”
Comments
Press Office
Announcements
What's On
Subscribe to improve your user experience...
Option 1 (equivalent of R125 a month):
Receive a weekly copy of Creamer Media's Engineering News & Mining Weekly magazine
(print copy for those in South Africa and e-magazine for those outside of South Africa)
Receive daily email newsletters
Access to full search results
Access archive of magazine back copies
Access to Projects in Progress
Access to ONE Research Report of your choice in PDF format
Option 2 (equivalent of R375 a month):
All benefits from Option 1
PLUS
Access to Creamer Media's Research Channel Africa for ALL Research Reports, in PDF format, on various industrial and mining sectors
including Electricity; Water; Energy Transition; Hydrogen; Roads, Rail and Ports; Coal; Gold; Platinum; Battery Metals; etc.
Already a subscriber?
Forgotten your password?
Receive weekly copy of Creamer Media's Engineering News & Mining Weekly magazine (print copy for those in South Africa and e-magazine for those outside of South Africa)
➕
Recieve daily email newsletters
➕
Access to full search results
➕
Access archive of magazine back copies
➕
Access to Projects in Progress
➕
Access to ONE Research Report of your choice in PDF format
RESEARCH CHANNEL AFRICA
R4500 (equivalent of R375 a month)
SUBSCRIBEAll benefits from Option 1
➕
Access to Creamer Media's Research Channel Africa for ALL Research Reports on various industrial and mining sectors, in PDF format, including on:
Electricity
➕
Water
➕
Energy Transition
➕
Hydrogen
➕
Roads, Rail and Ports
➕
Coal
➕
Gold
➕
Platinum
➕
Battery Metals
➕
etc.
Receive all benefits from Option 1 or Option 2 delivered to numerous people at your company
➕
Multiple User names and Passwords for simultaneous log-ins
➕
Intranet integration access to all in your organisation