Preview: Big copper deals to take centerstage in Santiago as demand heats up

Copper Mountain Mining

17/04/2023 12:00

(Repeats April 16 story with no changes)
       SANTIAGO, April 16 (Reuters) - Global copper producers
are converging in Chile this week for their largest gathering
since 2019, with talks expected to center on the industry's
growing M&A wave amid surging demand and tight supply for the
metal anchoring the green energy transition.     
    The buyout trend comes as Indigenous groups, host
communities and others increasingly oppose the industry's
attempts to build new mines, obstacles fueling the growing
realization among mining companies that they may need to combine
in order to grow.    
    Glencore Plc  GLEN.L  last month offered $22.5 billion to
buy smaller rival Teck Resources Ltd  TECKb.TO , an offer that
Teck has so far rejected in favor of its own copper-focused
growth plans. Lundin Mining Corp  LUN.TO  is paying nearly $1
billion for control of Chile's Caserones copper mine despite
ongoing political uncertainty in the country.
    Leaders from all three companies are slated to be among the
roughly 450 investors, executives, analysts and regulators
gathering in the Chilean capital of Santiago for the annual
World Copper Conference.
    Registrations are up roughly 8% since 2019 when the
conference was last held fully in person. Organizers say they
expect the attendance to grow as the week progresses.
    "The green transformation theme remains a strong tailwind
for copper, the king of green metals," Saxo Bank strategist Ole
Hansen told Reuters. "Not least considering how producers face
challenges in the years ahead with lower ore grades, rising
production costs and lack of investments in recent years."
    Global copper demand expected to reach 53 million tonnes
annually by 2053 - more than double current levels - but supply
is still expected to fall short, according an S&P Global
 SPGI.N  study. That projection in part underscores the deal
rush. 
    BHP Group Ltd  BHP.AX , the world's largest mining company,
last week won shareholder approval for its $6.4 billion takeover
of Australian copper producer Oz Minerals Ltd  OZL.AX .
    Rio Tinto Ltd  RIO.AX , which faces strong opposition to its
Resolution Copper project in Arizona, last December paid $3.3
billion to buy rival Turquoise Hill and gain direct control over
a giant Mongolian copper mine. 
    And Hudbay Minerals Inc  HBM.TO  last week said it would pay
$439 million for rival Copper Mountain Mining Corp  CMMC.TO .
    Beyond M&A, these mining giants face the creeping problem of
attracting new workers, especially in the United States, as well
as competition from upstart rivals exploring new ways to extract
copper at the bottom of the Pacific Ocean and through leaching
of mine waste. 
    "This is a fairly agile market and it is permanently
evaluating its long-term investments," Chilean Mining Minister
Marcela Hernando told Reuters. 
    Hernando, slated to deliver the conference's keynote speech
on Tuesday, expects copper output to jump in coming years from
her country, the world's top producer, thanks to operations from
state-owned Codelco, BHP, Anglo American Plc  AAL.L ,
Freeport-McMoRan Inc  FCX.N , Glencore and Teck. 
    Neighboring Peru, the world's second-largest copper
producer, also expects to boost production this year.
    Copper prices  CMCu3  touched a seven-week high last Friday
despite macroeconomic concerns fueled by uncertain Chinese
demand projections and the ongoing war in Ukraine, although they
are down nearly 5% from a seven-month high of $9,550.50 reached
in January.    
    "We expect the copper market to remain in deficit as the
green transition accelerates," Fitch Solutions said in a recent
report to clients.
   A portion of the weeklong conference is devoted to research
presentations on new applications for the red metal, part of an
industry plan to go on the offense against aluminum, a cheaper
but less-efficient alternative to conduct electricity.

 (Reporting by Fabian Cambero, Polina Devitt, Divya Rajagopal,
Clara Denina, Pratima Desai, Ernest Scheyder and Alexander
Villegas; writing by Ernest Scheyder; Editing by Sandra Maler)
 ((ernest.scheyder@thomsonreuters.com; Twitter: @ErnestScheyder;
+1-713-210-8512; Reuters Messaging:
ernest.scheyder.thomsonreuters.com@reuters.net))