Analysts assess that the global investment trend in the copper mining sector will focus on increasing production in producing countries.

This is inseparable from copper mines in producing countries that continue to age without new mines to replace them. Therefore, greenfield copper projects or mining in locations that have never been explored are considered promising.

Referring to the latest Wood Mackenzie analysis shows a significant shift in capital allocation strategies in the copper mining sector. According to the analysis, the shift in investment trends in increasing copper production is driven by three factors.

First, increasing non-discretionary capital expenditure requirements. Second, the continued need for a strong balance sheet to weather potential market volatility. Third, a growing focus on copper for growth and diversification strategies.

The analysis highlights that share buybacks are becoming less attractive at current valuations. In fact, 2024 turns out to be the low point for buyback volumes among large mining companies, with notional returns dropping to negative levels for many companies.

James Whiteside, Wood Mackenzie's Corporate Head of Metals and Mining, said share buybacks were no longer attractive. Instead, a shift to production growth was more promising.

"Diversified companies seeking relevance through big payouts are not being rewarded, but according to copper miners, investing in production growth is paying off," Whiteside said in a statement quoted Friday (4/4/2025).

Greenfield copper projects are starting to offer the most attractive returns for capital investment, he said. However, not every mining company has a growth opportunity path.

Wood Mackenzie estimates that major copper companies will accelerate their reinvestment efforts over the next three years, in aggregate exceeding 100% of their operating cash flow.

Whiteside added that for some companies, embracing growth-oriented risk is now the optimal strategy.

"Our analysis shows that growth in the right commodities is profitable, while higher variable payouts are not beneficial for companies struggling for relevance," he said.

Moreover, demand for copper from electrification is expected to increase significantly in the coming years. The high demand has also caused copper prices to reach an all-time high in May 2024, above USD 5 per pound.

Whiteside concluded that mining companies are entering a new era of capital discipline. The market response to this different approach will influence the long-term capital allocation decisions of large mining companies.

"Companies that can effectively balance growth investments with shareholder returns will likely emerge as winners in this changing landscape," he said.