Depressed copper prices are taking a bite out of small- and mid-cap miners and explorers, according to reports, which in turn has made many such companies prime acquisition targets for bigger players in the sector.
Copper prices peaked in early 2022 but tumbled over the course of the year and still haven’t fully recovered. That has forced some firms to trim their exploration budgets and many others to seek cash infusions from potential buyers.
Case in point, $22 billion worth of M&A has been launched in the copper sector thus far in 2023, according to Reuters. That includes Newmont Corp's planned purchase of gold and copper miner Newcrest for $18 billion, Hudbay Minerals' $439 million move to buy Copper Mountain, as well as Lundin Mining's acquisition of a stake in Caserone mines in Chile.
Another factor is the difficulty in developing new copper mines. Instead of launching new projects, larger miners are opting to acquire smaller ones, Reuters reported.
Looking ahead, the Chinese research firm Antaike isn’t exactly bullish on prices, even though copper will play an important role in the green energy transition.
The firm has predicted that global copper prices will drop to $3.18 per pound in the second half of 2023 due to soft demand in China.
That would put the squeeze on copper companies, even larger ones.
Contact Andrew Kessel at andrew.kessel@proactiveinvestors.com
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