Day 1 Highlights at 2022 BMO Metals & Mining Conference: Technology Means Green
Bottom Line:
Day 1 of the BMO Global Metals & Mining conference included presentations from the largest metals & mining producers Newmont, Barrick, Teck, First Quantum, and Agnico Eagle as well as the diversified majors. We found the mood at today's conference was optimistic and positive (partly on strong commodity prices), with a continued bias towards electrification and green energy. Copper continues to be widely viewed as an attractive way to improve exposure to this theme.
Key Points
Bullish copper. This is not new. In fact, it's similar to our takeaway from the 2021 conference. However, the level of conviction in the uplift from electrification, green energy, and the associated demand for copper appears to be higher than ever. Hudbay CEO Peter Kukielski also highlighted that copper is essential for urbanization and construction of infrastructure.
'Risk off' and 'risk on'. Base metals investors might be willing to accept higher risks
in exchange for copper exposure, we continue to see a 'risk off' approach to gold miners despite recent geopolitical events which has raised global risk levels.Many precious metalg companies continue to focus on capital returns, including dividends and buybacks, although we are seeing some growth. For example, Agnico Ealge and Yamana each highlighted new growth in gold. To be fair, growth appears to be limited to organic, or the existing pipeline, rather than M&A or major mergers - major M&A was definitely not a topic supported by larger precious metals miners.
Copper optimism might support building new mines. While we have noted before that the market appeared to be relatively supportive of growth in copper because of this expected theme, we are seeing the message resonate with producers - of both copper, other base metals, and precious metals. As a result, we expect higher copper production in the medium- to longer-term, although this might still not outpace the strong demand. Teck featured its QB2 project and subsequent phases, Hudbay highlighted the Copper World project, First Quantum and Lundin Mining showed growth pipelines. We have continued to see growth, especially copper growth at previous metals companies including Barrick, Newmont, and Yamana.
But it's about efficiencies too. We heard from companies which are looking to grow mine life, offset declining grades, mitigate cost inflation, or manage greenhouse gas emissions through adoption of technology. Newmont CEO Tom Palmer noted that autonomous haulage and battery electric vehicles are natural partners, as vehicles can autonomously drive to charging stations as necessary.
The 'dividend versus growth' debate continues to move towards growth. As companies and investors are increasingly bullish copper, we expect that companies
will continue to sanction growth. As an illustration of one of the more extremely
held views, Ivanhoe founder and Executive Co-Chair Robert Friedland remarked in his keynote address that it is 'very irresponsible' for miners to pay large dividends when the world needs copper, nickel, and other metals. These growth projects are potentially positive for copper companies, as investors appear to be supportive of this growth, and potentially royalty/streamers who will be presenting on Day 2 of the BMO Global Metals & Mining Conference.