Miningweb Weekly: Peter Major on Glencore’s big bets, copper hype and gold’s reality check

Veteran mining analyst Peter Major joins Alec Hogg to unpack Glencore’s aggressive JV spree, why copper may be running ahead of fundamentals, what’s driving asset sales at Robex, Thungela and Aveng, and why he’s sticking with gold ETFs but staying cautious on mining shares at current prices..Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox at 5:30am weekdays. Register here.Support South Africa’s bastion of independent journalism, offering balanced insights on investments, business, and the political economy, by joining BizNews Premium. Register here.If you prefer WhatsApp for updates, sign up to the BizNews channel here..Watch here.Listen here.BizNews Reporter.After trekking 55 kilometres through the Kouga landscape on the famous Kouga Camino in the Eastern Cape, veteran mining analyst Peter Major dialled into BizNews with sore legs but a sharp eye on the markets. The conversation quickly moved from hiking boots back to hard hats as attention turned to Glencore’s aggressive expansion drive unveiled during their recent capital markets update.“It looks like too much activity for one company,” Major said of Glencore’s packed agenda. “They’re talking about going 50-50 with Codelco to build a massive copper smelter in Chile, partnering with Teck on a copper operation in British Columbia, entering further joint ventures through Vale, and at the same time announcing efficiency drives including staff reductions.”Major believes these joint ventures signal a subtle shift in strategy. Glencore has historically worn multiple hats as miner, trader and refiner. That breadth brought opportunity but also diluted focus.“They might be spread a little thin,” he noted. “These joint ventures could actually work in their favour because now they’re partnering with specialists who know how to build and operate complicated projects.”Chile’s involvement particularly stands out. With Chinese smelters dominating global copper processing, the South American nation wants to retain more local beneficiation and reduce dependency on offshore refining. Partnering with Glencore allows Chile to maintain control of value chains while tapping into global trading expertise.“Chile wants to stay the world’s copper powerhouse and not be beholden to China,” Major said. “Those sorts of partnerships should actually be lessons for South Africa.”Asked about Glencore CEO Gary Nagle, Major was unequivocal.“He’s for real,” he said. “He’s coming from inside the business and has built real respect over many years. Following Ivan Glasenberg is not easy, but Nagle is seen as more approachable and closer to the operational detail.”One of the paradoxes surrounding Glencore’s strategy is the closure of some South African smelters even while the group expands projects elsewhere. Major stressed the explanation is purely economic, not political.“Smelters have to work at global cost levels. When logistics break down, electricity falters and crime disrupts transport, operations become uncompetitive,” he said. “Glencore stayed longer than most companies here, but eventually economics takes over.”That logistics theme echoed through several other corporate developments discussed during the interview.Construction group Robex’s decision to sell mining subsidiary Bauba highlights the difficulty of contracting companies moving into resource extraction without the necessary financial depth or mining skills.“Developing a chrome or PGM mine takes enormous capital,” Major explained. “Mining is only a third of the total cost. Transporting ore to port is another third, and shipping to smelters is the final third. If you don’t have a competitive edge in trucking, rail or ports, you battle from day one.”The chrome sector’s tight margins leave little tolerance for inefficiencies.“Chrome isn’t like iron ore where margins are fat most of the time,” he added. “When prices soften, non scale producers struggle very quickly.”A separate development from Thungela Coal caught Major’s interest. The miner’s sale of its Goedverwacht operation to London listed Besici PLC includes a valuable railway siding. Thungela walks away from stretched rehabilitation liabilities while potentially earning as much as R700 million.“That siding must be more valuable than people realise,” Major said, though he admitted more homework remained to understand the precise economics behind the transaction.What Thungela’s disposal highlights is a broader trend.“Big miners want fewer assets that deliver higher margins,” Major observed. “Companies like Rio Tinto and BHP are constantly streamlining.”That consolidation focus reflects the complexity of operating marginal mines within South Africa’s regulatory landscape.“We still don’t have a replacement for the old big mining-house model,” Major argued. “You need massive balance sheets and strong technical teams so that if one operation struggles, others carry the load.”Licensing delays have compounded development risk.“Some companies get water permits quickly, others wait years. That kind of uncertainty freezes projects even where geology is solid,” he said.Turning to commodities, Major devoted careful attention to copper. Rising electrification and renewable energy demand have pushed copper prices higher as cables, transformers and vehicle motors swallow large volumes of the metal.“Copper fits perfectly into the energy transition narrative,” he agreed. “But that does not guarantee sustained super-high prices.”History offers caution. Major referenced Goldman Sachs analysis suggesting copper may be running into bubble territory.“Whenever people believe there’s a permanent shortage, prices lure new supply,” he said. “Look what happened with lithium. Everyone said it was scarce, prices spiked and then production surged.”Building new copper mines requires enormous long-term capital commitments. Projects sanctioned at today’s elevated prices could struggle if metals cycle downward.“Harmony and others are entering the copper space at very high price points,” he warned. “You’re assuming copper stays near $10,000 per tonne in real terms for decades. That’s risky.”Despite recognising copper’s strategic importance, Major’s investment preference remains conservative.Switching to gold, he reiterated why he prefers owning bullion exposure via exchange-traded funds rather than mining shares.“The gold price might drop a little, but miners can fall by multiples,” he said. “Costs are exploding across the industry. Double-digit increases are common.”Although recent wage settlements at Sibanye-Stillwater were relatively contained, Major remains wary.“Gold companies are spending as if the current gold price will last forever. That makes me nervous.”At present levels he is not bullish on gold equities, even while accepting bullion’s value as a hedge asset.“I’m happy holding gold ETFs,” he said. “But I wouldn’t chase gold shares here.”His closing sentiment echoed the pragmatic caution that has defined his career.“Mining always looks easiest when prices are high,” he concluded. “That’s exactly when discipline matters most.”

Miningweb Weekly: Peter Major on Glencore’s big bets, copper hype and gold’s reality check

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