Mining companies set off a “copper rush”, and Glencore joins Peru's copper mine acquisition boom

The Zhitong Finance App learned that Glencore has acquired a mining project in Peru. This is the country's third copper transaction in less than two weeks. Companies are competing to increase investment in this metal, which is expected to be in short supply. Glencore said in a statement on Tuesday that it will acquire the Quechua copper project in the Cusco region from Japanese copper mining company Pan Pacific Copper. The exact amount was not disclosed. The Peruvian government estimates that the mine's construction investment is around 1.3 billion US dollars.

The deal follows two other Peruvian copper deals this month: Canadian company Rio2 Ltd. bought the Condestable project from Southern Peaks Mining for $241 million; Australian company Fortescue agreed to buy the remaining 64% of Alta Copper Corp.'s shares, which it does not yet hold, mark the Australian company's first large-scale foray into fields other than iron ore.

This wave of copper trading in Peru comes at a time when the price of copper is near its highest level in history, and copper is seen as a key metal for electrification and energy transition. Copper prices have risen by more than 30% this year, mainly due to production disruptions and difficulties in building new mines and expanding existing ones.

Glencore is increasing its investment in Peru as part of its plan to double global copper production. The company is betting it can handle sporadic protests over expansion plans in parts of Peru, as well as broader tension between the region's communities and the mining industry. Additionally, there has been a surge in informal mining activity in the region.

Companies have also shown a willingness to overcome the cumbersome bureaucratic procedures in Peru, where it can take decades to turn an exploration project into a working mine.

The Quechua project was unsuccessfully developed by Pan Pacific Copper. The Quechua project added a new component to the region, which already includes Glencore's Antapaccay mine and future Coroccohuayco projects.

The analysis points out that this asset should have greater value for Glencore, and Glencore can utilize existing infrastructure as planned for Coroccohuayco.

The Antapaccay mine was put into operation in 2012, and last year's output was around 146,000 tons. Glencore also holds 34% of Antamina, a giant mine in Peru, and collaborated with BHP Billiton (BHP.US), TECK.US (TECK.US), and Mitsubishi to develop the mine.

At the beginning of this month, Glencore said that in the next ten years, the company plans to increase its annual copper production to about 1.6 million tons by 2035 to reverse the decline in its copper production. Glencore's move comes at a time when global miners are stepping up copper production, but the company's own copper production will decline for the fourth year in a row. The company's copper production this year is expected to decrease by about 40% compared to 2018. Glencore also once again clarified a plan to increase copper production to 1 million tons by 2028, and said it will restart the Alumbrera mine as part of this plan.