What will it mean for the JSE if the stalwart share disappears?
The story of South Africa’s modern economy cannot be told without Anglo American, the giant mining conglomerate that also owns De Beers.
It became a major mining conglomerate, but by the 1980s, capital controls meant its profits were trapped domestically, and it ended up as a sprawling domestic business empire, owning everything from banks to wine farms. As much as we think of AI as existing somewhere “in the cloud”, it very much has a physical presence in data centres and needs consistent electricity supplies. All this will require copper. For instance, last week Microsoft announced a $10 billion deal with Brookfield to purchase 10GW electricity to power its data centres. That is enough electricity for 1.8 million homes.Global copper production seems unlikely to keep pace with this demand, based on the mines that are operating today.
The biggest copper producing country by far is Chile, which produces as much as number two and three, Peru and the DRC, combined. But mining production volumes in Chile have barely grown over the past decade. Elsewhere in the world, it is also slow going, less than 2% per year according to the International Copper Study Group.
In the short term, it could still come under pressure from overcapacity in China, the leading smelter of the metal, for instance. However, short-term price fluctuations are not the story here, the long-term outlook is. While the copper price is already near record levels in nominal terms, adjusting it for inflation shows that it is not historically stretched by any means.
Precious little exploration is done, despite geologists estimating that a rich natural bounty remains. If companies don’t need to raise funding for growth – and in South Africa’s sluggish economy, few do – new listings will be scarce.
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