TECHNOLOGY companies that need critical metals such as copper for data centre construction are turning to mining companies in an effort to secure direct supply, said Duncan Wanblad, CEO of Anglo American.
“It’s high on the mind of most of the people downstream, certainly in the new forms of demand – data centres, AI, these sorts of things – and those conversations are absolutely being had,” said Wanblad on Thursday.
Speaking at the FT Mining Summit, Wanblad said that some discussions included the possibility of direct investment in miners by technology companies. He added, however, that the complexity of the mining sector was a factor when thinking through deals.
“When people start to get their heads around the shape of a mining business, the capital intensity and the fact that it’s inherently cyclical, it’s less familiar to the types of businesses that are putting the inquiries in at the moment,” said Wanblad.
“But for sure, given the scarcity issue that we’ve been speaking about, a lot of people are looking for ways to secure supply,” he said.
In July last year, Apple signed a $500m deal with US rare earths miner and magnet maker MP Materials for rare earth magnets in order to reduce its dependence on China, which dominates rare earths supply.
More recently, Rio Tinto agreed a strategic collaboration with Amazon Web Services under which the miner will supply copper produced at the Johnson Camp mine in Arizona using its Nuton bioleaching technology.
Wanblad said there had been “deep expressions of interest” from technology companies in taking equity stakes, but added that nothing had materialised.
“To some extent, you’ve seen value chain consolidation more in China than you have in the West. Nickel is a really great example of that, where the mine and the processing facility are just part of a much bigger value chain, and the financial viability equation is calculated over the whole rather than the sum of the parts,” he said at the conference.
Anglo is currently in discussions with China’s competition authorities over approval of its proposed merger with Canada’s Teck Resources. While discussions so far had not indicated that Anglo’s expected completion date for the merger would change – it has forecast completion between September this year and March 2027 – Wanblad acknowledged the geopolitical environment had changed the pace of dealmaking in mining.
“There’s a lot of risk in terms of time. To the extent that geopolitical uncertainty converts directly into financial uncertainty ... people become a little bit more conservative about whether they’re going to pull the trigger on these sorts of deals or not,” he said.
"There was an appetite for dealmaking, but not many deals were “being activated,” he added.
This is playing out in Anglo’s efforts to close the sale of its Brazilian nickel business to China’s MMG, worth up to $500m, which is being examined by the European Commission.
Wanblad said that if the deal was not approved, the group would probably have to close the operations.
Anglo had run a competitive sale process before selecting MMG, and the regulatory uncertainty made it unlikely another buyer could be found, he said. “Given the European Commission’s current uncertainty, that probably militates against the likelihood of us being able to divest the business to somebody else,” he said.
“And so the consequence is that if we weren’t able to complete on this one, and to the extent that the markets didn’t look like they were going to reshape and recover, then the very probable future is that we would have to shut it,” said Wanblad.