BHP's $24.88B Settlement, 5E Starts U.S. Boric Acid, Copper Hits $10K

Key Takeaway

• BHP and Vale propose a $24.88 billion settlement for the 2015 Mariana dam disaster, with $14.08 billion aimed at governments.
• 5E Advanced Materials starts boric acid production, establishing a U.S.-based supply chain and extends financial waiver until end of 2024.
• GoldMining reduces Crucero project royalty from 5% to 3%, enhancing project value and aligning with its strategy in the Americas.

Copper's Surging Demand

Copper prices have reached a milestone, soaring to $10,000 a ton, driven by a significant industry challenge: the lack of adequate mining investment to satisfy the growing demand from electric vehicles (EVs), grid infrastructure, and data centers. This surge underscores a critical disconnect within the mining sector, emphasizing the urgent need for substantial investments to bridge the looming supply gap. BHP Group's ambitious $39 billion bid for Anglo American Plc is a testament to the industry's bullish stance on copper, aiming to secure its position as the leading copper producer. Despite this strategic move, the industry faces a daunting task as existing mine production is expected to decline sharply, necessitating an investment of over $150 billion from 2025 to 2032 to meet the global supply needs, according to insights from CRU Group.

Investment Shortfall

The mining industry is at a crossroads, grappling with the challenge of escalating copper production amidst a backdrop of underinvestment. The scarcity of high-quality deposits, dwindling funding for small explorers, and increasing social and environmental resistance complicate the landscape for new mining endeavors. Additionally, the rising costs of labor, equipment, and materials further exacerbate the situation. Laura Whitton of BHP has shed light on the complexities of copper mining, highlighting the industry's reliance on older mines with diminishing ore grades. Despite the current state of adequate supply, the market's bullish outlook, fueled by predictions of copper rallying to unprecedented levels due to anticipated shortages, underscores the critical need for investment.

The Financing Dilemma

The financial conundrum facing the mining industry is stark. To justify the significant investments required for new mining projects, copper prices would need to escalate to $12,000, as suggested by Olivia Markham of the BlackRock World Mining Fund. However, the reluctance among investors to fund these ventures presents a formidable barrier. Historical trends indicate a preference among miners to enhance dividends rather than increase spending when copper prices previously hit the $10,000 mark. China, which has played a pivotal role in augmenting the global copper supply over the past decade, now confronts its own set of challenges in sustaining supply growth. This scenario signals a broader imperative for investment in mining capacity to address the impending supply constraints.

Management Quotes

• Susan Brennan, CEO of 5E Advanced Materials:

  "The achievement established a U.S.-based boron supply chain. The company will now begin customer qualification for its boric acid product and anticipates scaling up deliveries upon successful validation."

• Luke Norman, Chairman of U.S. Gold:

  "Expressed gratitude to shareholders and highlighted the company’s focus on advancing its CK Gold Project in Wyoming and exploration projects in Nevada and Idaho."