A Global Copper Problem

“After its £31bn bid for Anglo American was rebuffed last week, BHP—the world’s largest mining group—is mulling an improved offer”

“Anglo American owns lucrative copper mines in Chile and Peru, and prices for the shiny red metal have been soaring recently”

“Copper is an essential raw material for economic growth. It has widespread application in homes, factories, energy grids and power generation. It is also used in renewable technologies including electric vehicles, solar panels and wind turbines. Artificial intelligence data centres rely on copper too for powering and wiring. All that demand is rubbing up against only gradual increases in supply”

“The acquisition of Anglo American’s mining sites, however, makes little contribution to boosting global copper output. It means shifting assets from one owner to another, rather than actually creating new ones”

“It highlights a worrying reality: it is simpler and cheaper to buy out a rival copper miner than to build a new mine. This raises significant concerns for meeting the rising copper demands of the global economy and the green transition”

“Copper demand could double by 2035” but the “pipeline of new projects is thin, and exploration budgets for copper have fallen since the early 2010s”

“Copper mining is a capital-intensive endeavour. Some analysts think prices would need to rise by about 20 per cent from current levels to attract investment in new projects. Even if prices get there, there are broader challenges”

“It can take well over a decade to move from discovery to production, by which time profitability and politics may have turned against any project”

“Governments have a role in bolstering the business conditions for copper mining”

“But the companies are key. Miners need to augment their extraction processes and vetting. Too many projects have suffered from safety failures, environmental damage, and exploitation. Mining responsibly also means ensuring local economies see benefits — building trust is important for long-term business. Improvements in copper recycling and reducing waste at existing sites can also help at the margin”