In the face of a looming copper shortage crucial for the global energy transition, Mark Bristow, CEO of Barrick Gold (NYSE: GOLD), has openly expressed skepticism regarding the effectiveness of mergers and acquisitions (M&A) as a solution to the deficit. According to Bristow, the current consolidation wave, exemplified by BHP’s (ASX: BHP) potential $39 billion acquisition of Anglo American (LON: AAL), fails to address the fundamental need for fresh copper supplies.
Copper, a critical component for renewable energy technologies and electrification, is facing soaring demand projections. By 2050, it’s anticipated that the transport sector will require 11.1 times more copper than it does today, largely due to the proliferation of electric vehicles. Similarly, global electricity grid expansion is expected to increase copper demand by 4.8 times over the same period.
These staggering demand figures underscore the urgency of addressing the copper supply gap, which is expected to reach around 10 million metric tons by 2030. Bristow emphasises the importance of fresh investments in the exploration and development of new copper deposits as opposed to merely consolidating existing resources under fewer corporate umbrellas.
The clock is ticking for BHP, which has until May 22 to decide on making a formal offer for Anglo American. Such a deal would further consolidate the industry but does not expand the actual supply of copper necessary for the energy transition. Bristow, recognising BHP as a major and formidable player, expressed reservations about competing in the consolidation battle. Instead, Barrick Gold’s focus appears to be elsewhere – on future resources and projects that will bring new copper to the market.
Bristow’s reservations about M&A are further illustrated by Barrick Gold’s reluctance to pursue an opportunity with First Quantum. Citing the uncertainties surrounding the Cobre Panama mine, which is in dispute with Panamanian authorities, he rejected any overtures for acquisition. Panama’s Supreme Court has declared the contract for operating the Cobre Panama mine unconstitutional, raising questions about the future of operations there.
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Without clarity and stability in mining jurisdictions, Barrick Gold sees no merit in potential deals, as per Bristow’s stance. This approach aligns with his broader view that tangible investments in copper production capacity are essential for addressing the supply challenges ahead.
As the industry navigates this complex landscape, it’s evident that finding a balance between M&A activity and the development of new resources will be pivotal for the copper sector’s ability to meet future demand. Investors and industry watchers alike will be carefully monitoring how mining giants like Barrick Gold and BHP tackle the daunting task of securing the copper that modern society will increasing rely on.
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