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Anglo Pacific moves into copper

The royalty company has added to its coal and iron ore-dominated holdings
September 2, 2019

Anglo Pacific (APF) has made a major diversification move, by spending $50m (£41m) on a copper royalty from a mine in Chile.

IC TIP: Buy at 192p

The royalty company will be hoping it has bought near the bottom of the market, with macroeconomic woes keeping copper prices under $3 per pound, or $6,600 a tonne. The 1.525 per cent net smelter return royalty is with Mantos Copper, a private company that produces around 45,000 tonnes a year. Anglo Pacific chief executive Julian Treger sits on the Mantos board, and the company said he did not take part in the acquisition negotiations or related board votes on either side. 

For Mantos, the $50m is part of a $250m financing package to fund the expansion of its concentrator plant, which will increase throughput by 70 per cent to 7.3 million tonnes a year and extend the mine life out to 2035.

Anglo Pacific chairman Patrick Meier said copper would eventually spark up again because of supply constraints. “Negligible supply growth and declining copper grades at existing operations are expected to drive a structural supply deficit based on industrial demand sources alone, with incremental copper demand resulting from new renewable energy power generation capacity, energy storage, and electric vehicle sales growth expected to create an even tighter supply environment,” he said.