Analysts predict that global investment in the copper mining sector will increasingly focus on expanding production in existing mining countries due to ageing mines and the absence of new developments. Wood Mackenzie’s analysis indicates a significant shift in capital allocation towards greenfield projects, driven by rising capital expenditure needs, the necessity for strong balance sheets amidst market volatility, and an emphasis on copper for growth. Share buybacks are becoming less attractive, leading companies to prioritise production growth instead. Demand for copper, particularly for electrification, is expected to surge, resulting in high prices.
Key Points
- Investment trends in copper mining are shifting towards production growth and greenfield projects.
- Key drivers include rising capital expenditures, the need for strong balance sheets, and focus on copper for growth.
- Share buybacks are declining in attractiveness, with 2024 projected as a low point for buyback volumes.
- Major copper companies are expected to exceed 100% reinvestment of operating cash flow over the next three years.
- Increased demand for copper linked to electrification is pushing prices to record highs.
Image source: REUTERS
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