A Lack of New MRE Copper Projects

By Tshepo Magagane

Why is the a lack of new MRE Copper projects Globally and especially in Africa?

It requires historical context. You can write-off 90s mostly for Commodities and Mining.

And then if you bring in the dot-com; you will understand how hellish things were in the early 00s. Assets were being written down!

China came mid-early 00s – then you saw the explosion BUT it was not for all commodities – yes, China still had an outsized impact on the sub-sector but it was mostly about bulks.

I learned to do earn-out structures with Copper in my junior years – majors were divesting from “marginal projects” and exploration spend was significantly cut – it was about scale and efficiency.

Capital was abundant in the 00s but it was for bulks. Merchant Banks, Family Offices, HFs, SWFs…Mid-10s, 1. mining fell out of favour 2. Merchant Banks were shut down 3. Commodities Funds had redemptions.

Remember that 10 yrs back, I wrote the attached piece when sellside banks were saying diversifieds were going bankrupt (that was the prevailing – ill-informed mood). We were even taking the CEO of ZCCM down to Indaba saying to investors “the ZCCM library has a trove of data…be the first mover”!

As I have always been saying about Copper – it is about Intensity of Metal Use – you dont have new demand drivers for Copper – just Incremental from electrification (as GDP increases, you naturally need more Copper – that simple, now you have these additional demand pressure points at the same time as you hit lower grades – why the African Copperbelts for Africa).

The opportunity is REAL, it is GENERATIONAL – Africa must take advantage of this!!