TOM PARKER

As South32 looks to grow its portfolio, the company seems to have identified a copper mine that could be an M&A fit.

According to The Australian Financial Review, South32 has sounded out a potential acquisition of Khoemacau Copper Mining which operates its namesake copper mine in Botswana.

Khoemacau ramped up to full production in February – achieving 3.65 million tonnes per annum (Mtpa) of throughput – and has a nameplate production capacity of 60,000 tonnes per annum of copper, with silver as an added-value product.

Khoemacau has an estimated mine life of 20 years, producing copper at C1 cash costs of $US1.15 per pound. Mining is currently taking place from Zone 5 – an underground mine where three corridors are producing an average of 1.2Mtpa of ore each.

It is understood South32 has engaged RBC Capital Markets as it prepares an indicative bid for Khoemacau Copper Mining, while the AFR also believes the company could come up against opposition, including from Sandfire Resources.

Khoemacau could be seen to complement Sandfire’s Motheo copper mine, which produced first copper concentrate in late May.

South32 chief executive officer Graham Kerr recently suggested copper, zinc and nickel were the three commodities driving the company’s M&A strategy.

The major currently produces copper from its 45 per cent stake in the Sierra Gorda mine in Chile – an asset it acquired in February 2022.

The company also has a series of earn-in agreements with resource companies around the world. This includes two emerging copper exploration projects in Argentina – Chita Valley and Don Julio.

Kerr said Argentina could be a copper jurisdiction to keep an eye on in years to come.

“Argentina’s become an interesting location,” he told reporters at a Melbourne Mining Club luncheon in late April. “When we first started doing some work there, we were probably the only ones. You’ve got BHP there, you’ve got Barrick there, you’ve Glencore there – everyone’s sort of pouring money into that jurisdiction at the moment.

“If you look at where it is, it’s on the other side of the Chile mountains where basically all the copper is. So I think that’s an area that’s going to develop pretty quickly. The challenge around that jurisdiction is it tends to be on average higher levels of arsenic, which typically you blend out, or you look at new technology to remove it.”

Elsewhere, South32’s portfolio is made up of commodities such as alumina, aluminium, zinc, silver, lead, nickel and manganese.

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TIMOTHY BOND

With the Newmont takeover of Australian gold miner Newcrest now given the green light by the board, Australia’s gold landscape is set to change forever.

Newcrest has a strong portfolio of assets which the US gold giant is evidently keen to get its hands on, such as the Brucejack gold and silver mine in Canada, the Lihir gold mine in PNG, Cadia Hill in NSW, and the Telfer mine in WA – both among Australia’s largest gold mining operations.

Newmont already owns the Boddington mine in WA and the Tanami mine in the NT, so the takeover will put the company in control of four out of six of Australia’s largest gold mines.

But industry experts from the Australian Financial Review (AFR) are speculating that not all of Newcrest’s assets will make the cut, and will be divested before the dust settles.

Newmont chief executive officer Tom Palmer told AFR that he considers only two of Newcrest’s assets “tier one”, which are Cadia Hill and Lihir.

“Those assets are tier one, world-class by any measure. So, they are firmly in the portfolio,” he told AFR. 

When the ink dries, this will give Newmont a portfolio of ten tier one assets.

Palmer also showed a keen interest in Newcrest’s Canadian assets, Brucejack and Red Chris, which are located nearby its own Saddle North project. Palmer called this combination of gold assets a “golden triangle”.

“I would call the golden triangle a tier one district,” he said.

That’s not to say that all everything else faces divestment, but it seems that Newmont will be considering its new assets very carefully.

“We are certainly looking for value over volume,” he said.

“So as we work our way through understanding the portfolio, we will be making judgements about what our go-forward portfolio is.”

If shareholders vote in favour of the Newmont takeover, foreign ownership of Australian gold assets will rise above the 50 per cent line, industry analysts from Surbiton Associates have revealed.

“In the early 2000s, the control of the Australian gold industry stood at 80 per cent,” Surbiton managing director Sandra Close said.

“It dropped to just under 30 per cent Australian control as overseas gold companies bought up Australian operations, and it was when the Aussie dollar was down around 50 (US) cents, so it was pretty cheap for them to buy the operations.

“Over time a lot of those operations were sold, so we’re currently looking at 60 per cent Australian control in the gold industry.

“But the recent announcement with Newmont and Newcrest, and we’ll be watching that closely, if that did go ahead it would mean Australian control would fall just below 50 per cent again.

“Whether we’d see yet another round of acquisitions as we did in the early 2000s is a pretty interesting question.”

The spot price of gold is currently trading at US$2015.60 per ounce.