A report from Bloomberg suggested that falling mine grades, a scarcity of new deposits and high costs to develop projects amidst low prices could spark M&A activity in the copper space. Prices have fallen roughly 17 percent in the past two years, helping to make some producers more affordable.

As quoted in the publication:

Three main obstacles stand in the way of deals. First, the industry is concentrated, with the top 10 miners accounting for more than 9 million tons of copper, or almost half the world’s mine supply, according to CRU. Second, most targets are tightly controlled by families, tycoons or governments, making a deal difficult. Third, pure copper miners command a premium, making an acquisition financially onerous to buyers.
“Buying any decent size copper producer has many obstacles,” said Richard Knights, mining analyst at Liberum Capital Ltd. “There is a premium in the market for copper producers.”
The last major copper acquisition occurred in 2013 when Swiss commodities giant Glencore Plc bought diversified miner Xstrata Plc, swallowing stakes in big mines in Chile and Peru.

Bloomberg suggested that beyond other larger potential targets, miners could turn to early stage developers around the world. However, the report also pointed out that “such acquisitions wouldn’t add any significant size to the top-10 copper miners and would bring the risk of cost overruns and delays in developing the projects.”

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