When gold broke through the US$4,000 mark in October last year to reach new record highs, the market saw it as investors seeking a haven in the midst of economic and political turbulence. But it was also driven by the fear of missing out, with the gold trade in physical, ETFs, and gold miners since becoming a crowded trade.
The recent and needed retreat to below US$4,000, and its subsequent vacillation around this level, may, however, provide a possible base for a further drive to new highs. At the same time, equities have been hitting new peaks driven by AI hyperscalers, though this momentum is wavering, and a reversal or correction may be in order.
In this period of uncertainty across most major macro factors, gold remains a key component of wealth retention, risk management, and an inflation hedge – that much is clear.
What’s important to recognise is that private capital seldom takes its cue from central banks when allocating assets. Yet when various developing and emerging market monetary authorities began expanding their gold reserves from around 2021 to diversify away from the US dollar, it shifted the gold market’s centre of gravity and created a floor of demand that investors subsequently latched on to, driving prices higher. It appears that central banks are still reducing their dollar holdings and increasing their share of gold, with gold holdings moving from just under 14% of total reserves in 2022 to over 18% at the end of 2024.
Motives aside, this pressure has ensured gold is at an all-time range high, and as a consequence, major gold producers are now exceptionally cash-flush, creating conditions ripe for strategic consolidation and expansion. In the last couple of years, the market has seen the gold mega mergers of Newmont with Newcrest, followed by a series of large consolidations in Coeur and New Gold, and deals such as Gold Fields and its acquisition of Osisko Mining.
Copper, too, has become a critical metal, underpinning the global energy transition and wider industrial activity, and while prices have remained relatively stable, they are supported by firm fundamentals – from renewable infrastructure to electric vehicles – giving the commodity a durable long-term outlook. Part of the reason it is also drawing the attention of gold miners is the inextricable link between the two metals, particularly in regions such as Latin America and Australia, where many deposits – known as copper-gold porphyries – contain both metals, or at least one as a by-product. As a result, many of the major gold producers are now actively pursuing copper projects, either through project development or mergers and acquisitions.
In the copper sector, the mega-merger of Anglo American and Teck Resources was predicated on building a copper powerhouse, consolidating copper assets across North and South America. It will be a top-five player in copper once the deal closes. In the gold sector, share-based mergers and consolidations are easier at these spot gold prices, as paying up for assets means paying a substantial premium on valuation, with gold companies measuring their existing resources and reserves at gold price levels substantially below the current spot price.
For both gold and copper, it is partly about chasing resources and ounces, and partly about ensuring scale in the market – scale that creates its own increasing reward because of the influence of index funds that drive investment at the shareholder level. The larger a producer becomes, the greater its weighting in global indices, and the more passive capital flows automatically into its shares. This has created a circular incentive: mergers raise index weightings, which attract inflows, which in turn support valuations and provide fresh currency for further deals.
As for why companies are pursuing M&A rather than organic growth, the reasoning is clear. When firms buy projects, they’re often acquiring assets that already have completed feasibility studies, defined resources, permitting progress, and established drilling programmes. This allows them to move more quickly into development and production. For investors, this translates into faster returns and reduced exposure to regulatory and operational uncertainties.
The alternative – undertaking greenfield exploration – is far riskier, more time-consuming, and capital-intensive. In South Africa, for example, exploration activity has massively declined because of regulatory uncertainty and requirements for free carried interests or mandated equity participation. Acquiring existing or near-production assets has therefore become a far more attractive and practical strategy, and it remains a key driver of M&A activity across the mining sector in Africa.
For many producers, the pursuit of efficiency has altered the way they view their portfolios. They are moving away from broad conglomerates spread across multiple commodities and are instead concentrating on what are now termed “strategic minerals”, with copper among the most prominent.
Seen together, gold and copper tell a clear story about how capital is now behaving in the mining sector. One metal reflects caution, the other conviction, yet both have drawn sustained investment for the same reason: they anchor long-term value in an uncertain world. Gold continues to serve as a store of stability; copper as the infrastructure of transition.
Africa’s minerals are indispensable as the world accelerates its transition to clean energy. But the continent must move beyond being a supplier of raw materials. The real opportunity lies in value retention: beneficiation, infrastructure development, and inclusive economic growth.
This kind of institutional depth will matter even more as the next phase of the commodity cycle unfolds. The continent is unlike any other, and the right partnerships matter here more than anywhere else, as this presents a once-in-a-generation opportunity to redefine Africa in the global mining chain.
By: Mpho Mofokeng, Director for Resources & Project Finance and Craig Brewer, Co-Head Origination, Investment Banking at Absa CIB
