Key insights
- Bank of America highlights increased government focus on securing metals supply chains due to persistent constraints. Reduced capital expenditure and declining ore grades contribute to supply issues. Increased demand for copper and zinc, driven by electrification and AI, may lead to higher prices and benefit mining companies. This could translate to increased investment and potentially higher valuations for US-listed mining stocks.
Investing.com -- Bank of America's Metals & Mining conference in Miami concluded on Sunday with industry executives highlighting a shift in the sector's outlook as governments increase their focus on securing supply chains.
The mining sector's share of the MSCI All-world index remains low, according to Bank of America. While miners and copper have tracked the performance of semiconductor companies, a wide gap persists between the two sectors despite both being essential for data centers and artificial intelligence infrastructure.
Reduced capital expenditure over the past decade has contributed to current supply constraints across multiple commodities, Bank of America noted. The US DFC confirmed that governments are now looking to strengthen supply chains, including support for early-stage projects that may struggle to secure market funding.
South 32 expects copper consumption to grow at a compound annual growth rate of 2.6% between 2025 and 2035, compared to 2.1% in the previous decade. Anglo American outlined expectations that copper demand per unit of GDP will increase, with Europe and the US potentially reaching half of China's current levels as economies electrify.
South 32 said projected zinc consumption increases would require the equivalent of three Taylor-sized projects to be developed annually over the next decade.
Anglo American and Codelco reported ongoing increases in capital expenditure intensities. Cochilco expects a 2.0% decline in Chilean copper production in 2026 due to lower ore grades, scheduled maintenance and operational constraints.
The three largest copper mines have delivered around 660,000 tonnes fewer units since 2024. Ivanhoe and First Quantum are working on restarting operations at Cobre Panama and Kamoa Kakula, though timelines remain uncertain with only a gradual ramp-up to previous capacity expected.
The Iran war has removed aluminum units from the market, while China's smelters are producing above the government-imposed capacity cap. South 32 confirmed a decline in LME inventories, with physical premia suggesting tightening markets in the US and Europe.