Barrick Gold stock: Incredible copper opportunity

Last Updated: 29. Januar 2024By

Copper, copper, and even more copper: The CEO of gold company Barrick Gold, Mark Bristow, has repeatedly emphasized the importance of the reddish-brown metal for the energy transition in recent years. Indeed, Bristow is currently pulling out all the stops to make the Canadian gold giant a world leader in copper as well.

The latest example: Lumwana. The copper mine is located in the north-west of the African state of Zambia, in the middle of a lucrative raw materials belt.

Barrick Gold bought the mine several years ago and put it into operation in 2019 after renovation measures. Lumwana is currently one of three major copper sites for the gold company, alongside Zaldivar (Chile) and Jabal Sayid (Saudi Arabia). In 2022, Lumwana produced around 121,000 tons, making it by far the most productive asset in the copper sector for Barrick.

Barrick Gold: Update on Lumwana Copper Mine However, CEO Bristow sees even more potential in the mine in Zambia. Several months ago, the manager announced plans to significantly expand the site in order to increase its output. Bristow has now given an update on these plans, once again revealing just how much hope he has for the copper commodity.

According to Bristow, the planned expansion of Lumwana will be accelerated. This means that the upgrade production will start as early as 2028. Through the expansion of the site, Lumwana is set to become one of the largest copper mines in the world – with a potential annual production of around 240,000 tons and a lifespan of more than 30 years.

Barrick plans to invest nearly $2 billion in the expansion, according to their own statements. Construction is set to begin by the end of 2024. The company also plans to complete its full feasibility study by the end of the year.

More prosperity through copper: Political support in Zambia The key to success: Barrick is working closely with local stakeholders on this project. In 2023, the company launched a special initiative (Business Accelerator) to enable new business opportunities for Zambian contractors in the supply chain of Lumwana and to support their growth. At the same time, Barrick is working with the Zambian government.

According to their own statements, since 2019 the mine has contributed nearly $3 billion to the Zambian economy in the form of taxes, license fees, salaries, procurement of goods, and services. Additionally, almost the entire workforce at the site is made up of Zambian citizens.

Last but not least, the expansion plans align with the government’s agenda. President Hakainde Hichilema wants to drive the mining sector in Zambia, particularly its copper production, in order to create new jobs and boost the economy. By 2030, Hichilema aims to increase Zambian copper production from the current 800,000 tons to around 3 million tons.

Large corporations like Barrick Gold, who are willing to make concessions, can count on political support. Other companies looking to expand their copper activities in Zambia include First Quantum Minerals and the resource holding company International Resources from Abu Dhabi.

Barrick and Antofagasta: New exploration project in Chile For Barrick, Lumwana is currently just one focus. The company also wants to strengthen its copper presence elsewhere. Together with industry representative Antofagasta, the company recently launched a joint venture to develop the copper project Minera El Encierro in the municipality of Alto del Carmen in Chile.

To do this, the partners plan to conduct extensive exploration with more than 60 drilling platforms and 35 concessions on an area of 9,400 hectares. Barrick is already collaborating with Antofagasta in Chile on the Zaldivar project, which produced around 44,000 tons of copper in 2022. The annual yield of El Encierro remains to be seen. In the coming months and years, the mining companies are expected to release their first assessments.

My conclusion for you The fact that Barrick Gold is increasingly focusing on copper is not a coincidence. The leading metal is crucial for many ecological technologies such as electric cars, wind turbines, and the energy infrastructure as a whole. Accordingly, experts predict significant demand and return potential for the commodity.

For example, Citibank expects the price to rise to $15,000 per ton by 2025. That would be nearly double the value at the beginning of 2024 (around $8,450). However, as an investor, you should consider that the copper price, in addition to the generally positive potential of the energy transition, remains heavily dependent on monetary policy and the global economy. For the Citibank forecast to come true, the global economy would need to experience a soft landing, meaning a relatively quick recovery.

The US Federal Reserve would also need to lower interest rates soon. This could not only boost the economy’s investment power, but also weaken the US dollar. A weaker dollar would, in principle, benefit copper as the metal is traded in US dollars and would become more attractive to buyers outside the US. Keep these factors in mind.