LONDON – An expected global shortage of copper in years to come has thrown a spotlight on the value of mines that produce the metal, with scouts from private equity firms, trading houses and miners sniffing out potential targets.
Strong interest in good quality copper assets was recently highlighted by Sumitomo Metal Mining buying another 13 percent stake in Freeport-McMoRan’s Morenci mine for $1 billion.
Earlier on Thursday, Swedish mining and smelting group Boliden struck a deal to buy the Kevitsa mine in northern Finland for a cash consideration of $712 million.
“Copper is the most sought after commodity, it’s a good time to buy copper assets now, there are some very visible deficits coming up at the end of this decade,” said Simon Lovat, a commodity analyst at fund firm Carmignac.
Forecasts for more than two years out are difficult as much could change, but there are some; Deutsche Bank analysts expect small surpluses this year and next, a deficit of 280,000 tonnes in 2018, 350,000 in 2019 and 280,000 in 2020.
The problem is mainly on the supply side, partly in top producer Chile, where output has slipped in recent years.
Chile’s copper output last year was 5.76 million tonnes, about 25 percent of the global total, and expectations are for further falls due to deteriorating ore grade and a lack of investment in the mining and power industries.
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