BHP’s Bid for Anglo American Exposes Critical Gap in Mining Capacity, Threatening Global Copper Supply.
The recent surge in copper prices, soaring to $10,000 a ton, has sent shockwaves through the industry following BHP Group’s bombshell bid for Anglo American Plc. However, beneath the excitement lies a troubling reality: the mining sector is failing to keep pace with demand, raising fears of a looming supply crisis.
Major players in the industry are eager to capitalize on the growing demand for copper, fueled by the rise of electric vehicles, grid infrastructure, and data centers. BHP’s ambitious $39 billion proposal to acquire Anglo American underscores its strategic focus on expanding its copper operations. Yet, despite this bullish outlook, the industry’s investment in new mining projects remains alarmingly low.
While BHP’s potential takeover could solidify its position as the largest copper producer, supplying roughly 10% of the market, it won’t address the fundamental supply deficit. Existing mines are projected to see a significant decline in production in the coming years, leaving a substantial gap that requires over $150 billion in investment between 2025 and 2032 to bridge, as per CRU Group estimates.
Bernard Dahdah, senior commodities analyst at Natixis SA, warns that the shortage of copper poses a significant risk to the electric vehicle industry, particularly in achieving net-zero emissions targets. He emphasizes the urgent need for a comprehensive strategy to ramp up supply.
The looming supply crunch has been the driving force behind copper’s impressive 16% rally this year. Unlike previous price spikes, current demand for copper remains relatively subdued, with the physical market adequately supplied. However, the imbalance between supply and demand signals a potential crisis if not addressed promptly.
As the industry grapples with the challenge of meeting escalating demand, the urgency to invest in new mining projects and infrastructure has never been more pressing. Failure to do so risks exacerbating the copper crisis and undermining vital sectors reliant on this essential commodity.