Canada Unearthed: Miners are no longer running for gold as copper emerges as the prize

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If you can’t beat them move the goalposts.

BHP (ASX:BHP) and Rio Tinto’s (ASX:RIO) bid for supremacy in the iron ore game aside, few rivalries in the mining world have been as pitched and heated as the battle for leadership in the gold sector between the USA’s Newmont and Canada’s Barrick Gold Corp (TSX:ABX).

While America and Canada may be poles apart in terms of economic heft, Barrick is no Terrance and Phillip character in the rivalry between the Denver and Toronto counterparts.

At one point it was a very close run thing, especially after Newmont gobbled up (ironically Canada focused) Goldcorp and Barrick took control of African digger Randgold.

That became extremely heated when Barrick made a controversial and never going to fly bid to eat up its biggest rival — effectively forcing its hand on a JV to merge their Nevada operations, the largest gold mining initiative in the world.

In recent years though Newmont has pulled well ahead, eyeing off production of over 8Mozpa if its deal to acquire Australia’s Newcrest (ASX:NCM) gets across the line.

Barrick on the other hand is expected to produce just 4.2-4.6Moz. And boss Mark Bristow has appeared to throw some shade in the direction of Newmont and acquisitive up-and-coming third place runner Agnico-Eagle, regularly saying in recent times that M&A was either less attractive than exploration, or posed the threat of picking up bad assets encasing the handful of Tier-1 assets actually worth acquiring at the gold sector’s advanced age.

But can it be a copper king?

Unable to beat Newmont on the gold side, it could well become a bigger force in copper.

One of the reasons Newmont is so gosh darn keen on Newcrest is the massive copper tonnes it will pick up as part of the deal for Australia’s biggest gold producer.

The Cadia mine in NSW in particular is a more than 100,000tpa copper producer as well as challenging of the title of Australia’s largest gold mine.

Mark Bristow has been on the campaign trail lately, pitching his vision to investors, analysts and media in Africa, where Barrick boast a number of operations.

Ironically, one of Barrick’s most criticised historic deals could be a key to its growing copper business.

(An aside, it has been rumoured and rebuffed that Barrick took a stab at a merger with copper and nickel miner First Quantum earlier this year. We’ll focus on its current ops for now though).

Under pressure from a host of interested parties at the tailend of the last boom, notably China’s Minmetals, Barrick forked out a hefty US$7 billion plus for Equinox Minerals, owner of the Lumwana copper mine in Zambia.

Two years later as prices crashed to long term lows that was hit with a US$4.2 billion writedown. Ouch.

But with the energy transition stoking hopes for a major copper boom for use in EVs and renewables in the decades to come, the investment isn’t looking quite so gloomy and could be key to Barrick’s plot to become a major copper player beyond its current output of 190,000-210,000tpa.

In Lusaka last week Bristow announced plans to spent US$2 billion on a massive expansion at Lumwana.

The increase of its process plant to 50Mtpa over a 36 year life could expand Lumwana alone to 240,000tpa from 2028.

A full feas study is due by the end of next year. It comes as Zambia’s New Dawn Government looks to take a major role in the energy transition, setting a target of churning out 3Mt of copper metal by 2030.

Barrick also produces copper from its Zaldivar and Jabal Sayid JVs in Chile and Saudi Arabia.

UBS this week ratcheted up its long term forecasts for copper from US$7700/t (US$3.50/lb) to US$8800/t (US$4/lb), citing higher incentive prices to bring new operations online.

The commodity is among those analysts remain most bullish on with UBS expecting deficits to start from 2025, with the likelihood of structural deficits if approvals to mine new deposits do not dramatically increase in the next 10 years.

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