VRIC: Copper majors are hunting for explorers 

Despite the upheaval of a new Donald Trump presidency in the U.S., pundits at the Vancouver Resource Investment Conference held firm that the metal’s long-term future is as bright as ever.

As key to the energy transition, copper is finding investors from beyond the sector, which has also been cited as one of the reasons behind its roller-coaster 2024. Trump’s tariff threats had seen the red metal hit all-time price highs last year before that dissipated to 15% lower lately.       

Lobo Tiggre, founder and CEO of investment advisory Louis James, said copper is his top pick this year, though it’s not all that surprising on a copper panel assembled at an investment conference. Unlike oil, copper is supply constrained, he said. Unlike some of the other favourite commodities of delegates and experts – gold, silver and uranium – copper is relatively cheap at today’s prices.

“That gives you more alpha,” Tiggre said. “Demand is going up even without” artificial intelligence and electric vehicles, he added.

VRIC has been running for more than a quarter century and the city’s reputation as a junior mining hub sees investors and speculators of all stripes flock to the often raucous get together. According to the organizers, 2025 saw a large proportion of first-time attendees, a reflection of the wider interest mining now receives outside usual junior mining punters. 

Large projects

Rick Rule, founder of the businesses now known as Sprott US Holdings and Battle Bank, said that from a speculator’s perspective it’s important to keep in focus the nature of copper mining. They are big operations requiring big risks, but can produce even bigger payouts.

“I haven’t always had an opinion as to the direction of the copper price,” Rule said. “But I didn’t care much because I knew that a drill hole could put me on the path to a $5-billion company or a $10-billion company.”

Rule pointed out that the mammoth size of many copper mines means that these operations also count as the biggest gold mines in the world. 

The prime example of this is Freeport-McMoRan’s (NYSE: FCX) Grasberg mine. In last year’s third quarter, in addition to 477,000 tonnes of copper, the mine in Indonesia’s remote West Papua province produced 456,000 oz. of gold. That means that thanks to byproduct credits, Freeport’s copper output is essentially cost-free.

As for demand, Rule says there are still one billion people globally with no access to primary electricity and two billion with only intermittent or too expensive electricity. 

“The boom from 2000 to 2010 was mostly as a result of the urbanisation of China. We have the rest of the world to go.”

Old deposits

However, the bigger story for Rule is supply, especially the age of existing mines, depletion and ever lower grades. Among the world’s largest copper mines, No. 1 La Escondida run by BHP (NYSE, LSE, ASX: BHP) in Chile is a relative newcomer – it was discovered in 1981, and only hit 1 million tonnes 20 years later. 

The weighted average discovery year of the world’s top 20 biggest copper mines is 1928. U.S. number one mine Morenci, operated by Freeport in Arizona, was discovered in 1870. The world’s number two copper mine, Collahuasi, run in Chile by a Glencore (LSE: GLEN) – Anglo American (LSE: AAL) joint venture, dates back to 1880. 

Worse, said Rule, more recent large-scale and higher-grade deposits like Rio Tinto’s (NYSE, LSE, RIO, ASX: RIO (55%) and BHP’s (45%) Resolution Copper in Arizona continue to languish nearly 30 years since discovery due to “a woefully dysfunctional permitting system.”

The copper sector is ripe for consolidation evidenced by BHP’s approach of Anglo American last year and more recently reports that Glencore and Rio Tinto have been discussing a tie-up. 

Both proposed deals centred on copper. A Rio-Glencore combination would result in 1.6 million tonnes of combined annual output while a BHP-Anglo merger would produce the world’s first 2-million-tonne copper operation on an attributable basis.

Major attractions

Further down the copper production ladder M&A is also likely, according to Rule, because the majors have under-invested for 25 years and they know it.  

“If you are lucky enough to make a profound copper discovery, you actually need to pretend that you’re going to put it in production yourself, but you don’t need to worry about that,” he said.  

“The Glencores will be there, the Tecks will be there (Teck Resources (TSX: TECK.A, TECK.B; NYSE: TECK)), the Rios will be there and the BHPs will be there. The Zijin’s will be there and they’ll be there like white on the rice.”

Asked about how to weed out too-risky copper explorers and developers when looking to invest in the sector, Ivan Bebek, a gold mining M&A specialist and now CEO of Coppernico Metals (TSX: COPR; US-OTC: CPPMF) ticker), zoned in on capital. 

“It’s expensive to drill, it’s expensive to socially impact the [surrounding] communities. Everything about copper is expensive,” said Bebek, whose company is advancing a large-scale copper project in Peru.

“You can also look at share structure and how many outstanding shares and thirdly how much have management bought of their own stock in the last year. That’s critical. If they’re not buying shares of their company at cheap prices, why should you?”

Experience

Another factor to take into account when assessing the risks of investing in a copper exploration company is experience, Rule said. 

Beyond just exploration knowledge, investors should seek companies that know copper and, specifically, have porphyry rock experience. Companies also need the heft to fund or arrange the $5 billion to $10 billion it might take to develop a mine, he said.  

“Size really matters in the copper business,” he said. “So if you hear the bootstrap story, like ‘we’re going to start with a small high-grade deposit, and we’re going to use the free cash flow to build BHP over 20 years with no dilution…’ 

“From an entrepreneur’s point of view, that’s a seductive story, right? But it’s a lie.”