'Structural shift' in copper as M&A, exploration spending hit decade highs

A structural shift in the copper segment is underway as corporate activity rises to a 14-year high in 2025 and exploration spend finally shows signs of recovery, according to S&P Global Market Intelligence data.

The combined value of copper-focused M&A reached $23.16 billion in the year to date as of Oct. 15, which is already 286.9% higher than full-year 2024 despite the number of deals falling 34.4% to 124.

Anglo American PLC's planned $53 billion merger with Teck Resources Ltd. is the materials sector's largest transaction in the year so far, Market Intelligence data shows.

Acquired copper reserves are up 66.5% to 14.9 million metric tons, with the average price paid jumping 66.2% to 48 cents per pound.

M&A deals involving copper are "probably going to be happening more ... with the current move toward decarbonization and copper demand continuing to move in the right direction," Bryan Quinn, managing director and CEO of Aurelia Metals Ltd., said during an Oct. 21 quarterly results call.

"The reason why M&A activity is happening is because people can't find the copper they're looking for. So if you can't find it, go buy it," Quinn said.

"There's been a structural shift in the sector, both for gold and copper," Lawrie Conway, CEO and managing director of Evolution Mining Ltd., said during an Oct. 15 results call. "Short-term supply issues, matched with an increasing long-term demand forecast but no clear pathway for increased supply, is seeing rising near-term and long-term copper prices."

Exploration rebounding

Climbing copper prices are partly due to a lack of quality discoveries, which in turn is caused by underinvestment in exploration.

However, the global copper exploration budget hit a high of $3.20 billion in 2024, the most budgeted since 2013 at $3.47 billion, according to Market Intelligence data.

By country, the US budgeted the most for copper exploration in 2024 with $455.6 million, followed by Canada with $335.9 million and Australia with $305.9 million.

"There is a lot of increased spend in gold and in copper," Aurelia's Quinn said. "That's good, but it's got to be in areas where there's actually copper to find and the right grades."

"In our big mines, the grades are dropping as the high grades have been taken, so [production] is at a higher cost per [metric ton]," Quinn said. "So they're going deeper and deeper and it's getting harder and harder."

Structural deficit

S&P Global Commodity Insights' Metals and Mining Research team raised its 2025 forecast for the average London Metal Exchange three-month copper price to $9,595 per metric ton, in a Sept. 22 note. The analysts said the move reflects "ongoing market tightness and continued support from the US dollar."

"For copper, the market faces profound mine supply constraints amid surging demand driven by the global energy transition, electric vehicles, and data center growth," Patricia Barreto, senior principal analyst for copper at Commodity Insights, said in an Oct. 17 email.

"The average timeline for copper mine development is around 17 years, with declining ore grades and permitting delays exacerbating supply shortages. Despite these constraints, demand is projected to rise sharply, fueled by infrastructure and technology needs. This imbalance results in a structural deficit, with immediate deficits already emerging due to major mine disruptions," Barreto said.

Prices more sensitive

S&P Global Ratings recently upgraded its copper price assumptions to $10,500/t for the 2025–2027 period, up from a range of $9,300/t to $9,500/t, "with the prospects of persistently tight markets."

"Copper prices [have] become even more sensitive to supply disruptions," Ratings said in an Oct. 13 note.

Overall demand fundamentals remain favorable despite trade tension risks dampening Ratings' economic growth expectations. "Even if prices drop periodically, the combination of robust demand, tight mined output, disruptions for difficult assets, and modest exploration success keep raising the price floor on copper," the note said.

Most of the world's biggest copper producers are expected to beat earnings expectations in the third quarter.

The cash costs for the 90th percentile of global output is about $3/lb based on 2024 constant US dollars, according to Market Intelligence data. "That is unsustainably low because it only indicates market-clearing cash operating costs before sustaining capital, which would mean a significant cash bleed for numerous mines," Ratings said Oct. 13.

Since the end of the third quarter, "spot prices have climbed further in response to significant supply disruptions," Rio Tinto Group said Oct. 14 in a quarterly production update. The company plans to boost its copper output by more than 50% in 2025.

"The market-clearing cost has likely gone up for the next few years with recent events," including the fatal tunnel collapse in July at Codelco's El Teniente mine in Chile, Ratings said.