This Massive Conglomerate Just Made an Unusual Copper Bet

I’ve been speaking to a number of contacts on travels through Asia the past two weeks. And one theme keeps emerging when it comes to mining.

Copper.

Big consumers and mining firms here are relentlessly seeking supply. To the point that buyers are starting to get involved in an unusual array of projects.

And late last week we got news of another leading-indicator deal in this space.

That involves Korean conglomerate Daewoo. Which announced it will buy a 24% stake in a copper mining operation on Wetar Island in Indonesia.

The project is owned by Australia’s Finders Resources. And the deal will see Daewoo pay Finders about $45 million to acquire the minority interest. Including the right to secure up to 20% of the mine’s copper production.

To be sure this isn’t a mega-deal in size or scope. The Wetar operation currently produces only about 3,000 tonnes of copper yearly. With plans on the books to ramp up to 25,000 tonnes by 2015.

But it’s precisely the small size of the deal that makes it interesting. Showing that even a big firm like Daewoo is expanding its horizons, to target smaller mining projects.

That makes sense in the current copper-hungry environment. Where the drive for large projects has been running high–increasing competition and prices for big mines and development projects.

The Daewoo deal may thus signal that developers are now looking further down the food chain to meet their needs. A positive development for firms holding mid-sized projects globally.

The other interesting part of the deal is the location. With Indonesia recently having received a lot of negative press around its export ban on copper concentrates.

The Wetar mine doesn’t suffer from that issue–having its own dedicated cathode plant to produce copper metal. Still, this is an aggressive move by Daewoo into a place that many observers in the mining business are today avoiding.

All of which suggests copper projects are in demand–wherever they may be in the world. 

Here’s to all things great and small,

Dave Forest

dforest@piercepoints.com / @piercepoints / Facebook

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