More Australian copper deals on Harmony’s ‘to do’ list

The CSA deposit is one of Australia’s deepest underground mines.

South Africa’s Harmony Gold has more acquisitions on its agenda, sources say, after agreeing to buy Cobar-based miner MAC Copper for $1.6bn last week.

MAC Copper was the result of a special purpose acquisition vehicle which purchased the CSA Copper Mine in Cobar, NSW, from Glencore in 2023 for $1.6bn.

The South African group has been eyeing opportunities in the Australian market, where it wants a greater presence, but it also wants to increase its exposure to copper miners.

The understanding is that Harmony is keen to buy more miners in the Cobar region in a deal that could create synergies.

On one hand, buying other smaller copper miners operating in a similar area makes sense, because its CSA mining plant has 1.8 million tonnes of capacity per annum, whereas the CSA mine is producing only about 1.1 million tonnes. Gaining operational efficiencies could see it increase production to about 1.2 million tonnes per annum at best.

CSA is one of Australia’s deepest underground mines, and there would be difficulties lifting output because it would involve mining deeper and increasing ventilation.

On the face of it, Aeris Resources appears to be a logical target, and its shares rallied after the Harmony deal was announced, with market participants betting it could be next on the list.

Aeris has a 1.8 million tonnes per annum capability plant but Harmony really needs extra ore rather than a bigger plant.

Like MAC Copper, previously called Metals Acquisition Corp, Aeris also has not been able to fill its plant.

Sources say the problem is consistent in the region with copper miners, where there is more mill capacity than ore being produced.

Another option is Peel Mining, with a $34m market value.

The logic for Harmony to do more deals is that its share price in South Africa is trading a high levels as investors pile into the stock to gain exposure to the soaring gold price.

A $15bn business buying small miners in the Cobar region would not be seen as a typical move for the South African miner, which would be more inclined to do larger deals. Sources believe consolidation by way of further acquisitions is not likely until at least a year.

Perhaps one option is the company swoops after Cobar copper miners consolidate, with previous suggestions that groups like Peel Mining and Kingston Resources could merge.

There have been suggestions in the past about a merger between Aeris Resources and Aurelia Metals. Aurelia has a plant with 850,000 tonnes of capacity and its greatest value is in its zinc project, whereas Harmony is keen to gain exposure to copper.

A strategy for MAC Copper under Mick McMullen’s leadership could have been buying Aurelia and processing its ore through the CSA facility.

Experts say that the Cobar basin is an under-explored ­province.