ON December 3 diversified miner Glencore rolled out plans for new copper projects totalling $14bn in expenditure. That increases to $24bn should it develop El Pachón, a project in Argentina that could enter production in 2033.
By 2035, Glencore will be the world’s largest producer of the metal, CEO Gary Nagle said, producing more even than Codelco, the state-owned miner of Chile, the world’s copper mining hub. “We have a clear pathway for our copper business to exceed 1Mt of annual production by the end of 2028, with a target to produce about 1.6Mt,” he told a capital markets day presentation. CFO Steve Kalmin called production of that scale “the promised land”.
Promised, indeed. So far, only the $230m reopening of Alumbrera, a mothballed mine, also in Argentina, has been formally approved by Glencore’s board. The balance of the new copper production will depend on there being continued favourable market conditions.
In fairness to Glencore, Alumbrera, which will operate for four years, is a definitive commitment to more production as it will provide infrastructure for the neighbouring Agua Rica, a $4bn project Glencore plans to open in 2027. In fact, many of the projects on Glencore’s books are like this, relatively low-hassle brownfield extensions. Yet in a mining industry poor on delivery generally, there are valid concerns about project execution, especially for Glencore following a difficult year of operational missteps and expectations of challenging production next year.
At the capital markets day arranged to unveil its project schedule, Glencore confirmed 2026 copper production would come in lower, between a range of 810,000 to 970,000t from a previous forecast of 930,000t. (Although in Glencore’s defence, the lower anticipated output was owing to the Collahuasi JV. Anglo American, Glencore’s partner previously flagged the downgrade.) Shares in the company improved 6% on the day, but Richard Hatch, an analyst at Berenberg Bank, says this had more to do with there not being any other bad news.
Nonetheless, Nagle thinks now is the time to commit to the projects. He bases this conviction on a steady upward “grind” in the price of copper. Previous price spikes alarmed him, but the past few years have been heartening, he says. “A couple of hundred dollars every year. That gives us comfort.” In fact, copper has done better than a slow grind; it has shot up from $8,300/t in late 2023 to $11,500/t today, according to London Metals Exchange data. This year alone it is about $2,000/t higher amid production interruptions that drew fresh attention to an anticipated supply deficit.
Glencore calculates that a copper supply deficit of about 300,000t next year will grow to an astonishing 27Mt by 2050, mostly owing to an explosion in demand sparked by grid infrastructure and data centres. AI data centres require 27t-32t of copper per megawatt of power — twice the requirement of conventional data centres, according to a recent report by the Financial Times. BHP, the world’s largest miner, said copper used in data centres will “grow sixfold by 2050”.
JPMorgan forecasts new highs for base metals, with copper rising to $12,000/t (and gold to $5,000/oz). But it’s not a universal outlook. Goldman Sachs is less bullish on the red metal. The bank’s analysts said recent record-breaking prices for copper reflect expectations of future tightness rather than current fundamentals. “We do not expect the current breakout above $11,000 to be sustained,” the bank says.
This was Glencore’s first capital markets day in three years, a clear response to questions as to its strategic direction. Instructively, its rival Rio Tinto held a similar call for investors. Unlike Rio, however, Glencore did not announce major corporate surgery as analysts had suggested it could. Glencore can point to portfolio simplification since 2021 that included selling 35 assets for $6.3bn. But amid a sluggish share price performance, analysts want more.
“While copper dominated the capital markets day narrative, it lacked hard medium-term targets and a roadmap for portfolio simplification, areas we were seeking more commentary on,” says Goldman Sachs analyst Matt Greene. “We see scope to rationalise, release and recycle capital into the copper pipeline.”
Not enough
Glencore instead tightened the screws on efficiencies. For instance, the group disclosed it had already reduced employees by about 1,000. But its marketing division, which is often debated by analysts, will remain. The coal assets, set for a spinoff less than two years ago, also stay in the group amid questions as to whether that deal could be revisited. Similarly, there are no plans for Glencore to sell or restructure any of its oil or gas assets. Nagle says the assets have major value as they provide trading synergies.
Swiss bank UBS says: “We see value in Glencore, especially if they deliver on the copper growth, though we expect it will take time for the market to believe in this. We still believe significant value could potentially be unlocked through a restructuring, though this appears unlikely near term.”
One view is that Glencore is preparing for an outright sale or merger of the business — an outlook based on previous comments Nagle made that the diversified mining sector was too small to warrant the interest of generalist fund managers. Speculation is that the group held informal merger talks with Rio Tinto last year. Was Nagle involved in fresh talks? “No comment,” he told journalists shortly after the capital markets day.
What seems clear is that the big miners are being forced to change. In addition to Glencore’s apparent signal for buyers, Rio Tinto is facing calls to execute mergers & acquisitions and split into base metals and iron ore. Meanwhile, BHP made a second unsuccessful attempt to buy Anglo American, which is, instead, merging with Canada’s Teck Resources after stripping out assets it has owned for a century.
“A global ‘critical minerals’ paradigm shift is under way as capital markets awaken to the mining sector’s role in national security, supply chain resilience, power and electrification,” JPMorgan analysts Dominic O’Kane and Patrick Jones say in a note. “2026 should see global miners embrace proactive strategic change to reposition for future opportunities in copper, gold, lithium and new frontiers (US, Argentina).”