M&As in the copper space could surge in 2020, especially if Chinese companies come to the party – by Gabriel Friedman (Financial Post – January 15, 2020)


As the U.S. and China prepare to sign the first phase of a trade deal, copper prices are on the rise, hitting an eight-month high at US$2.83 per pound on Tuesday. Yet, many analysts are taking a circumspect view of the impact that a U.S.-China trade deal will have on copper.

“I think there’s certainly near-term impact, but I’m not sure it really is going to resolve core issues between the two countries,” said Pierre Vaillancourt, a senior analyst at Haywood Securities.

Still, he added, “We see positive supply and demand trends regardless of where trade is.” It ties into a growing if cautious optimism for the copper sector after a lacklustre year in which prices fell five per cent — averaging US$2.82 per pound in the first quarter of 2019 and US$2.67 per pound in the fourth quarter. RBC Capital Markets analysts last week predicted that M&A in the copper space could surge in 2020, especially if Chinese companies remain hungry.

Already, Jianxi Copper Corp. holds an 18 per cent stake in Canada’s First Quantum Minerals Ltd., which is looking to ramp up production from its recently constructed Cobre Panama mine; while Zijin Mining Group Co. Ltd. and Citic Metal Group Ltd. hold a combined 40 per cent of Ivanhoe Mines Ltd.

The RBC analysts also questioned whether Hudbay Minerals might be acquisitive after a U.S. judge last year overturned its approvals to build its Rosemont mine in Arizona.

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