Anglo American, Power Metallic Mines, BHP: Copper Supply Tightens as Mining Giants Respond

Anglo American: Copper Production Under Pressure as Analysts Turn More Optimistic

Anglo American is feeling the difficulties facing global copper mining. The mining group reported a 5% decline in production to 174,900 tonnes of copper. Severe weather events in Chile and the processing of lower-grade ore weighed on the result. Nevertheless, management is maintaining its full-year guidance.

In the first nine months, Anglo American produced 519,000 tonnes of copper. This is around 1% less than in the same period last year. The development shows how challenging it has become for even established mining groups to increase output continuously.

Anglo American is a major global commodity producer. The group is active in copper and iron ore mining, among other areas, and is increasingly focusing its portfolio on strategically important metals. Copper plays a key role, as expanding energy infrastructure and industrial electrification will drive long-term demand.

Analysts are currently divided. JPMorgan upgraded the shares from Underweight to Neutral and raised its price target from GBP 33.50 to GBP 38.50. Barclays was more optimistic and raised its price target to GBP 47.80. Deutsche Bank confirmed its Buy recommendation in early October and raised its target to GBP 47.

The decisive factor will be whether Anglo American can overcome its production problems and benefit from rising copper demand over the long term.

Power Metallic Mines: High-Grade Drill Results, Analysts See Significant Upside Potential

Power Metallic Mines has taken an important step towards potential mine development. At the start of the month, the Canadian exploration company commissioned engineering firm BBA to conduct a preliminary economic assessment (PEA) of its Nisk project in Québec. The PEA is expected in the first half of 2027 and will examine potential mining methods, capital costs, operating expenses and the economic viability of the Lion and Nisk Main deposits.

The initial resource estimate for the high-grade Lion zone provided an important basis for this. It comprises 4.145 million tonnes in the Indicated category with an average copper equivalent (CuEq) grade of 3.86%. A further 601,000 tonnes were classified as Inferred. In addition to copper, the deposit contains palladium, platinum, gold, silver and nickel.

The latest deep drilling results are particularly interesting. On September 22, Power Metallic reported a grade of 14.00% recovery-adjusted copper equivalent over a drill interval of 5.70 m. This included 2.15 m at an exceptional 24.62%. The drill intercept at a vertical depth of around 800 m confirms that the high-grade mineralisation extends well below the existing resource. The new results are not yet included in the current resource estimate.

GBC Research analysts also see considerable share price potential. In their recently published study, they confirmed their Buy recommendation and set a price target of CAD 3.00 (EUR 1.86). At the same time, they increased their valuation of the Lion and Tiger deposits from CAD 570 million to CAD 660 million.

The experts view the additional resource potential below the existing Lion zone and the metallurgical results particularly positively. Laboratory tests delivered copper recoveries of more than 98% and concentrates with a copper content of over 25%. A further advantage is that, according to the company, around 59% of the Lion resource defined to date lies within a conceptual open-pit model. This could allow open-pit mining initially, followed by underground mining later.

The PEA planned for the first half of 2027 is intended to examine this scenario in greater detail. According to GBC, further high-grade drill intercepts, resource expansion, and positive study results could lay the foundation for a higher company valuation.

BHP: Copper Production Plunges, Billions in Investment Aim to Secure Growth

BHP has also reported a significant decline in its copper production. In the first quarter of the Australian 2027 financial year, output fell 19% to 400,700 tonnes. In the same period last year, it had been 493,600 tonnes. Factors responsible included lower ore grades, planned maintenance work and weather-related disruptions in Chile.

Safety stoppages following a fatal accident at the Escondida mine and a conveyor belt problem at the Australian Carrapateena site added to the pressure. Nevertheless, the group is maintaining its full-year guidance of 1.65 to 1.80 million tonnes of copper.

BHP is one of the world's largest mining groups. Alongside iron ore and coal, copper is becoming increasingly important strategically. The group is therefore investing heavily in its existing deposits and new projects.

In Chile, BHP is financing the construction of a new concentrator for Escondida. At the same time, BHP plans to expand its copper business in South Australia over the long term. The focus is on the Olympic Dam and Carrapateena sites. The group aims to increase regional production to around 500,000 tonnes of copper annually by 2035.

Analysts are also closely examining the growth prospects. Deutsche Bank raised its price target from GBP 27 to GBP 29 on October 7, but maintained its Hold rating. Berenberg raised its target to GBP 35 at the end of September. Bank of America upgraded its rating to Buy in early October.

Conclusion

Anglo American and BHP show how difficult it has become for even mining giants to increase copper production. At the same time, both groups are investing billions in additional capacity. Power Metallic Mines is earlier in the value chain. The high-grade Lion resource, successful deep drilling and the start of the PEA could significantly advance the Nisk project. The key will be whether the geological potential can be turned into an economically viable mining operation.