Monsters of Rock: Copper supply just doesn’t get any easier to find

A big copper mine is the only thing harder to find than the TV remote. Pic: Getty Images

Copper supply could continue to disappoint, if Codelco’s comments are anything to go by
Investors flip cash into Chilean copper hunter Marimaca Copper and manganese explorer Black Canyon, while Peak shares pump on $195m Shenghe offer
The good and the bad of the ASX 300 Metals and Mining Index for this week

A quick one today from large cap land, with a sleepy market following the past fortnight’s catalogue of earnings results.

The question today, why are copper prices pumping?

Global economic conditions remain cloudy, with Trump tariffs, Chinese malaise and this week’s gold price surge suggesting bankers have little faith in the stability of the market.

According to the International Copper Study Group usage is rising at a faster pace than refined supply, but we’re still looking at a relatively comfy if unspectacular ~250,000t surplus in 2025.

Regardless, LME copper prices rallied last week to almost US$10,000/t, with the three-month benchmark clipped slightly to US$9898/t overnight.

Bloomberg’s industrial metals index has played second fiddle to precious metals this year.

But it’s ticked up 2.7% in the past month as commodities have fetched a bid, in spite of weak data out of mainland China.

“Positive copper and aluminium trade data signalled stable demand and underpinned price gains, driven by growth in clean energy end markets. However, a mixed bag of high-frequency data releases kept sentiment cautious,” analysts at BMI Commodity Insights said.

“The August official manufacturing PMI underscored this, ticking up to 49.4 from 49.3 in July but remaining below the 50-neutral mark for the fifth consecutive month, suggesting an incremental m-o-m improvement but no meaningful rebound.”

Supply side challenges seem to be the juice here. Mining.com reported some comments from a Spanish language conference recently by Codelco chair Maximo Pacheco, who thinks Chile’s copper production will continue to stagnate around 5.5Mt in the years ahead as miners struggle to bring projects online.

ANZ pinned last night’s limited drop on a 16% cut in EV deliveries forecast by China’s BYD for 2025 from 5.5m to 4.6m units, but fingered supply side issues for keeping copper losses muted.

“Demand for copper and other battery metals has been well supported by the EV sector in China in recent years. However, the losses were limited as the market continues to face supply side issues,” Madeline Dunk, Brian Martin and Daniel Hynes said in their morning note.

“Codelco said that Chile’s copper production could stagnate at approximately 5.5Mt/y as the industry confronts mounting operational challenges.”

Investors ready to punt

With that in mind, there is no shortage of punters on hand to stick their dosh into the relatively limited copper options in the ASX market.

c.f. Canadian tourist Marimaca Copper, which just pulled in $80 million in a cap raising to issue 8.2m new CDIs to pay for work on its Marimaca Oxide deposit near Antofagasta in Chile.

Euroz Hartleys, Macquarie and Beacon Securities were on the book for the raise, which will give Marimaca and pro-forma market cap of over $1.1bn and cash and equivalents of $117m at an offer price of $9.70/sh.

Costing US$587m to develop, the project is expected to produce a meaningful 48,000tpa for its first decade at second quartile all in sustaining costs of US$2.09/lb.

That gives the 748,000t copper reserve a post tax NPV of US$1.1bn and IRR of 39%, with costs clocking in at less than half of current copper prices.

Drilling is also due to increase at the nearby Pampa Medina sulphide discovery, with $25m to be spent there and on the Marimaca sulphides, with $35m pledged for design, engineering, site works and long lead items at Marimaca Oxide.

Hot manganese stock Black Canyon (ASX:BCA), which has made a high-grade discovery in the Pilbara, was also hitting up the market for cash, raising $10m at 42c a share.

That included backing from instos at Perennial, Nero Resource Fund and Lowell Resources Fund (ASX:LRT).

Some intriguing corporate activity on the M&A front this morning as well.

Chinese rare earths major Shenghe Resources’ has boosted its offer for Tanzanian rare earths developer Peak Rare Earths (ASX:PEK) to no less than 44.3c per share in cold hard cash, valuing the company at $195m.

It’s gone best and final and has the support of Peak’s board, with Tanzania’s Mining Commission already supporting the trade.

A few hurdles for the scheme remain, including a Peak shareholder vote, Fair Competition Commission approval in Tanzania, Australian court approval and an independent expert’s report.

The previous bid came in at a minimum 35.9c per share, or $150.5m plus matching the amount raised under an oversubscribed $7.5m entitlement offer.

Peak shares rose close to 24% on Friday morning.