Big miners’ capital discipline is good news for investors (The Economist/ – June 25, 2021)

HIGH IN THE mountains of southern Peru lies Quellaveco, a vast open-pit copper mine. It is one of the world’s largest untapped deposits of the red metal. Anglo American, a mining giant and its majority owner, has, along with another investor, spent over $5bn getting it up and running.

It is expected to come online in 2022. Once operational it will add more than 10% to the copper output of Peru, the world’s second-biggest producer of the stuff.

In the past when commodity prices were surging, as they have been of late (see chart 1), the world’s miners would be piling into projects like Quellaveco. This time the notable thing about it is its uniqueness.

Few of the diversified mining behemoths—Anglo American, BHP, Glencore, Rio Tinto and Vale—have big new mines in the works. That is partly because of the industry’s long lead times; Anglo bought Quellaveco in 1992.

But other forces, too, lie beneath the subdued investment. They will have consequences for the mineral-intensive energy transition towards a climate-friendlier world. The big five miners consolidated their market power with a spate of huge mergers in the 2000s, just in time for China’s emergence as a voracious consumer of metals.

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