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The Glencore (LSE: GLEN) share worth has surged in latest months, making it one of many prime performers within the FTSE 100. With copper costs up 20% over the previous yr, can sturdy metals demand outweigh ongoing weak spot in coal?
Australian coal
Whereas many rivals are exiting coal, the miner has doubled down, even buying Teck Assets’ steelmaking coal enterprise final yr.
But the technique is underneath severe strain. Benchmark Newcastle coal costs are down 20%, and onerous coking coal has fallen by a 3rd. Australia, the place it has main operations, has felt the impression essentially the most.
Operational prices are climbing as mines go deeper and labour stays tight. On prime of this, the Australian authorities just lately introduced a A$600m rescue package deal to maintain Glencore’s loss-making copper smelter afloat.
Crucial minerals on the rise
The Australian authorities’s intervention highlights an even bigger development: securing vital minerals provide is turning into a nationwide precedence.
Simply because the house race of the Fifties outlined a technology, the worldwide race for AI dominance is about to reshape industries – and geopolitics.
It isn’t nearly China’s generative AI mannequin, DeepSeek. Governments are positioning themselves to manage metals important not just for AI but in addition for renewable vitality, making a strategic bottleneck that might have long-term implications for miners like Glencore.
Capital spending crunch
Whilst demand for vital minerals surges, trade capital spending barely budged – rising simply 5% in 2024, down from 14% the yr earlier than. That’s a warning signal for anybody betting on the vitality transition.
Copper, specifically, is underneath the microscope. The Worldwide Power Company predicts a 30% provide deficit by 2035. And with good cause: the easy-to-mine deposits are lengthy gone.
Chile is commonly likened to the second-largest oil-producing nation by being known as the ‘Saudi Arabia of copper’. But it surely has seen flat output and new discoveries are more and more uncommon. Mining firms are having to dig deeper, actually, to search out worthwhile ore.
Then there’s the allowing headache. On common, it takes 15 years to show a copper discovery right into a working mine. That’s a protracted wait in a world chasing AI, renewables, and knowledge centres hungry for electrical energy.
All of this implies provide might stay tight for years to return. For miners this presents each a problem and a chance: those that can navigate the complexity could also be properly positioned to profit from a market that’s instantly in brief provide.
Backside line
The miner is concentrating on 850,000 tonnes of copper manufacturing in 2025, rising to round 1 million tonnes by the top of the last decade.
Even past that, there’s optionality for an additional 1 million tonnes. The corporate is underneath no strain to convey it on-line instantly – growth shall be fastidiously timed when costs mirror an actual provide scarcity.
That issues as a result of copper is central to electrification, AI infrastructure, and the vitality transition. Provide constraints are more likely to persist, making timing essential.
Glencore’s strategy provides it flexibility to maximise returns with out flooding the market. Whereas share worth swings are inevitable, this mix of near-term progress and long-term optionality retains me assured.
It’s why, regardless of ongoing share worth volatility, I proceed so as to add to my place when funds enable.
