Copper Sparks Mining Sector's Megadeals

 

 

“Booming demand for copper is driving a spate of mining megadeals, in a rush to secure more of a metal essential to powering artificial intelligence.

 

Rio Tinto and Glencore said late Thursday that they are in talks to create what would be the world's largest mining company, with a market value of more than $200 billion.

 

Spurring those talks -- and a string of other recent actual and attempted mergers -- is copper. U.S. copper prices hit a record last Monday on concerns that demand for the so-called red metal will outstrip supply, as well as lingering anxiety about tariffs.

 

Copper has uses including piping, circuit boards and wiring. Its application as a conductor of electricity is what makes the metal key to powering the AI revolution. Growing adoption of electric vehicles and renewable energy such as solar power has also boosted demand, as has increased military spending on copper-heavy ammunition and other weaponry.

 

Looking ahead, new supplies aren't expected to keep pace with the soaring demand.

 

Demand is set to outstrip supply by 25%, or 10 million metric tons, by 2040, according to forecasts from S&P Global, unless miners increase production.

 

"At stake is whether copper remains an enabler of progress or becomes a bottleneck to growth and innovation," Daniel Yergin, S&P Global's vice chairman, said in a report this week.

 

In November, the U.S. Geological Survey added copper to its list of critical minerals deemed vital to national security and the economy, a designation that could open the door for federal aid to encourage production.

 

U.S. copper prices rose 41% last year and have made further gains in 2026, closing at a record high of $5.9245 a pound in New York last Monday.

 

Doing deals can help miners increase their production faster than building new copper mines, which can take decades to bring to fruition. Existing mines are also fraught with challenges that can disrupt output.

 

The rekindling of talks between Rio Tinto and Glencore is the latest in a run of copper-inspired attempts to consolidate the mining industry. Last year, Anglo American agreed to merge with Canada's Teck Resources in a deal that industry leader BHP tried to gate-crash.

 

"Mining megamergers are back in most cases, the key to the proposed combination is copper," Jefferies analysts wrote in a note to clients.

 

Buying or merging with other companies that own copper assets increases miners' exposure to the in-demand metal. They may also hope to increase production through greater efficiencies and financial heft. But deals don't necessarily boost investment in new mines.

 

A combination of Rio Tinto and Glencore would probably bring more copper onto the market by providing more capital to develop the latter's assets, according to Duncan Hay, an analyst at broker Panmure Liberum.

 

Glencore owns a stake in a major copper mine in Chile as well as other copper assets around the world. Last month, it set out plans to boost production, including by restarting a mine in Argentina.

 

Rio Tinto's copper business includes the Kennecott mine in Utah and a long-delayed project in Arizona that could supply a quarter of U.S. demand of the industrial metal when it starts up.

 

Overall, copper would account for 36% of the combined company's earnings, according to Jefferies, making the metal its largest business and overtaking the iron-ore operations that turned Rio Tinto into one of the world's top two miners.

 

S&P Global projects demand for copper to swell to 42 million metric tons by 2040, a 50% increase from current levels.

 

The rise of AI is juicing demand. Massive amounts of the conducting metal are needed in electricity-guzzling server farms. Over the next decade, data centers will need more than 4.3 million metric tons of the metal, according to research firm BloombergNEF. That is equivalent to around a year's supply from the world's top supplier, Chile.

 

Decarbonization and defense are also supporting prices. Demand for EVs alone will rise to 2.3 million tons in 2030 from 1.3 million tons in 2025, Benchmark Minerals Intelligence estimates.

 

Record military spending and restocking of depleted ammunition supplies may also increase demand, analysts say. Copper, which is used as an alloy in ammunition shell casings and elsewhere, is the Defense Department's second-most-used material, according to the White House.

 

Meanwhile, the prospect of President Trump's tariffs have added volatility to the copper market. Prices have been boosted by U.S. importers filling warehouses with the metal to get ahead of potential new tariffs that the White House has floated. However, analysts at Goldman Sachs said this week they expect clarity on tariffs to reduce stockpiling and weigh on prices.

 

Another factor that could affect demand would be any weakness in the Chinese economy, which is responsible for around half of consumption.

 

"The main driver of demand over the last 10 years or so has been China -- and that's been slowing," said Panmure Liberum's Hay.” [1]

 

1. Copper Sparks Mining Sector's Megadeals. MacDonald, Alistair; Ballard, Ed.  Wall Street Journal, Eastern edition; New York, N.Y.. 12 Jan 2026: B1