'Copper Will See It's Value Soar' Says Expert: Mining M&A Season Heats Up With All Eyes On EV Metals

As merger and acquisition season continues to heat up in the mining industry, larger companies within the sector are looking for smaller players, especially if those junior miners and exploration companies have copper discoveries on the horizon.

Last week, Canadian Prime Minister Justin Trudeau stepped in between Glencore, Plc and Teck Resources, Ltd TECK to signal caution around the former’s hostile takeover bid of the latter, stating it would require a “rigorous process” of approval, according to Benzinga.

Teck, which operates a copper and molybdenum mine in Kamloops, B.C. as well as other copper, coal and zinc mines in the Americas, is a prime acquisition target for larger companies, with 21% of its revenue coming from copper as of 2016 –before copper started to substantially increase in value due to its use in electric batteries.

At the Prospectors and Developers Association Conference (PDAC) on March 5, co-head of the EV battery materials research group and senior expert at McKinsey & Company Ken Hoffman highlighted the importance of copper for the energy transition, pointing to President Joe Biden’s Inflation Reduction Act (IRA) as a key catalyst in raising the price of the metal.

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A Look Back At What Hoffman Said

“The industry itself is looking at something like a $15 to $20 trillion impact. And guess why? In the U.S. they don’t want to mine, but they want to buy from sources deemed localized, deemed acceptable to U.S. regulators. Canada, we love you. This is where it will come from,” Hoffman said, speaking about the need for minerals in EVs.

“The IRA that the U.S. has enacted could add $1 trillion to the battery and sustainability value chain. $1 trillion. It’s changed everything. It’s going to change metal flows; it’s going to change pricing; it’s going to introduce premiums and Europe, who’s not so happy about this --is going to challenge and it’s going to have its own knock-on effect,” he added.

Although Hoffman said that “the energy transition will be everything, absolutely everything,” not all miners will benefit and some, that have seen high levels of popularity as critical minerals in the EV battery supply chain will find themselves on a downward trajectory, according to Hoffman.

“Copper is starting to pick up and other metals will become more and more important,” Hoffman said. Copper, which is not considered a critical mineral, according to the U.S. Federal Government, will see its value soar over the next decade, as the energy transition gains momentum, according to Hoffman.

“I hear this phrase a lot — structural deficit. That is a lie. There is no such thing as a structural deficit and any analyst who says so is just making up words. There’s supply; there’s demand; there’s price; that’s it,” Hoffman said.

Discussing where he sees the current price of various minerals heading Hoffman said, “for pretty much everything, we’re in what we call a ‘Greenfield’ — good pricing environments through 2030.”

But some minerals, which saw soaring prices recently, may have reached their peak. “Cobalt looks like it’s in big-time trouble, and surprisingly, lithium,” Hoffman continued, “we’ve got a lot of lithium in the world. The world is not short lithium under any circumstances.”

On what metals Hoffman believes are or will be critical in the future, he said “all sorts of metals are going to be needed. Lots of copper –not in the EV but in infrastructure,” adding, “we’re going to see a lot of aluminum; we’re going to see a lot of nickel — I wrote an article in 2018 saying nickel would be the lynchpin for batteries and it is — manganese (is) the single most critical mineral for batteries right now,” he said.

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