Gold and Copper: Decoding the New Common Sense of Mining Expansion in Africa

The global mining landscape is undergoing a profound transformation, and Africa sits at the epicenter of this shift. Recent trajectories in the prices and strategies surrounding gold and copper are not merely commodity stories; they are revealing a new, pragmatic “common sense” that is redefining mining expansion in Africa. This evolution is driven by a confluence of macroeconomic realignments, strategic corporate maneuvers, and an urgent continental imperative to move beyond raw material exportation. By analyzing the divergent yet complementary narratives of these two critical metals, we can uncover the strategic logic shaping investments, mergers, and the future of value creation on the continent.

Introduction: The Dual Signals from Precious and Industrial Metals

In late 2024, gold’s breach of the $4,000 per ounce threshold sent a dual message to global markets. On one hand, it underscored gold’s timeless role as a safe-haven asset and inflation hedge amid persistent geopolitical and economic uncertainty. On the other, it reflected a powerful, structural shift in global reserve management, as central banks—particularly in emerging markets—embarked on a multi-year campaign to diversify away from the U.S. dollar. Simultaneously, copper, the quintessential energy transition metal, has maintained robust support from long-term fundamentals tied to renewable energy infrastructure, electric vehicles, and grid modernization. The sustained interest in both metals, despite different price catalysts, points to a unified strategic pursuit: the acquisition of secure, scalable mineral assets. Nowhere is this pursuit more intense and consequential than in Africa, a continent endowed with world-class deposits of both.

Key Points: The Strategic Imperatives

• Central Bank Demand as a Foundation: Sustained central bank gold buying since 2021 has created a durable price floor, enabling gold producers to generate exceptional cash flow for consolidation.
• M&A Over Greenfield: Major mining companies are overwhelmingly pursuing acquisitions of advanced-stage assets (with defined resources, feasibility studies, and permits) over high-risk, capital-intensive greenfield exploration, especially in regions with regulatory uncertainty.
• The Copper-Gold Nexus: Many prolific African and global deposits are copper-gold porphyries. This geological linkage is driving gold-focused miners to diversify into copper, and vice versa, to de-risk portfolios and capture by-product credits.
• Scale for Index Inclusion: Consolidation is partly fueled by the goal of achieving market capitalization size that ensures significant weighting in major global indices, thereby attracting passive investment inflows—a self-reinforcing cycle.
• Africa’s Value Retention Challenge: The continent’s true opportunity lies in moving up the value chain through mineral beneficiation, local infrastructure development, and inclusive business models, not just in supplying unprocessed ore.

Background: The Macroeconomic and Geological Catalysts

The Central Bank Paradigm Shift

The most significant, under-discussed driver of the current gold cycle is the coordinated strategy of global central banks. Data from the World Gold Council indicates that official sector gold holdings have increased annually since 2021. The proportion of gold in global foreign exchange reserves rose from just under 14% in 2022 to over 18% by the end of 2024. This trend, led by buyers from China, Poland, Turkey, and other emerging economies, represents a deliberate, long-term de-dollarization strategy. Unlike private investors, central banks buy and hold indefinitely, creating a persistent, non-speculative demand base that has permanently altered the gold market’s supply-demand equilibrium. This structural support has translated into consistently strong spot prices, which in turn has recapitalized major gold mining companies.

The Copper Supercycle Narrative

Copper’s story is one of secular demand growth driven by the global energy transition. Reports from the International Energy Agency (IEA) and major investment banks consistently forecast multi-decade deficits for copper, as demand from power grids, renewable generation, and electric vehicles outpaces new supply development. This “copper supercycle” thesis is not based on short-term speculation but on tangible, policy-driven investment in physical infrastructure. While prices have been relatively stable compared to gold’s surge, the long-term contract is underpinned by verifiable project pipelines and government commitments (e.g., the U.S. Inflation Reduction Act, EU Green Deal). This provides a stable, predictable outlook for copper assets, making them highly attractive for strategic acquisition.

Africa’s Geological Endowment

Africa hosts a disproportionate share of the world’s remaining high-grade, tier-one mineral deposits. For gold, regions like Ghana, Mali, Burkina Faso, and the Democratic Republic of Congo (DRC) are top producers. For copper, the DRC’s Copperbelt (host to some of the world’s largest copper-cobalt deposits), Zambia, and emerging projects in countries like Mauritania and Namibia are critical. Crucially, many of Africa’s most significant deposits are copper-gold porphyry systems (e.g., in the DRC and Zambia) or gold deposits with copper as a valuable by-product. This geological synergy means that a strategy focused on “strategic minerals” often naturally leads to a dual-commodity approach in Africa.

Analysis: The New Common Sense in Action

Mergers & Acquisitions: The Engine of Modern Expansion

The current wave of mining M&A in Africa is characterized by large, share-based mergers between major producers. Examples include Newmont’s acquisition of Newcrest (creating a global gold behemoth) and Anglo American’s proposed merger with Teck Resources, explicitly framed as a move to build a top-tier copper company. The “common sense” here is multifaceted:

1. Valuation Arbitrage: With gold prices at record highs, the internal valuation of resources and reserves for acquiring companies (often marked to a conservative, long-term price) is significantly below the current spot price. This creates a compelling accounting and strategic rationale for using equity (stock) to acquire assets, as the premium paid is less painful when the underlying asset is intrinsically undervalued on the buyer’s books.
2. De-risking Through Advanced Assets: Acquiring a project with a completed feasibility study, defined mineral resource, and often a partially built processing plant drastically reduces technical and permitting risk. It accelerates the path to cash flow. As noted by industry experts, this is far preferable to the “far riskier, more time-consuming, and capital-intensive” greenfield exploration, especially in jurisdictions where regulatory uncertainty—such as fluctuating mining codes, demands for free-carried interests, or mandated local equity participation—can derail a project for years.
3. Portfolio Rationalization: Companies are shedding non-core, “conglomerate-style” assets to focus on a smaller number of “strategic minerals”—primarily copper, but also nickel, lithium, and of course, gold. This creates leaner, more focused entities that are better aligned with the thematic demands of the energy transition and ESG-focused investors.

The Index Fund Flywheel

A less obvious but powerful force driving consolidation is the global rise of passive investing. Larger mining companies achieve greater weight in major indices like the FTSE/JSE or S&P/TSX. As passive funds (ETFs and index trackers) grow, they must mechanically buy shares of these larger constituents to replicate the index. This creates a virtuous cycle: a merger increases a company’s market cap and index weight → passive funds buy shares → share price and valuation are supported → the company has a stronger currency (its own stock) and valuation to pursue the next acquisition. This “index inclusion” benefit is a form of financial engineering that rewards scale and is a key, quantifiable driver behind the “common sense” of mega-mergers.

Gold’s Caution vs. Copper’s Conviction

The metals tell different stories about the current cycle. Gold’s price surge is partly a signal of caution—a response to financial instability, currency hedging, and geopolitical risk. The investment thesis is defensive. Copper’s steady, fundamentals-driven rise represents conviction in a long-term, structural transformation of the global economy. The investment thesis is offensive, tied to tangible physical build-out. That both are attracting massive capital into African mining reveals that investors and corporates are pursuing a dual strategy: preserving wealth (gold) while betting on the future (copper). The “new common sense” is to hold both in a portfolio, and to secure production of both through integrated asset bases, especially in geologically endowed regions like Africa.

Practical Advice: For Investors, Companies, and African Nations

For Investors and Shareholders

• Look for Integrated Asset Portfolios: Favor mining companies that have a balanced exposure to both gold (for stability and cash flow) and copper (for growth), particularly if those assets are in stable jurisdictions within Africa with clear production pathways.
• Analyze M&A Strategy: Assess whether a company’s acquisition spree is adding tangible, near-term production or merely buying speculative exploration land. Prioritize deals with clear NPV (Net Present Value) accretion and rapid payback.
• Consider Index Inclusion: Monitor a company’s trajectory toward major index inclusion. Upcoming index reviews can be catalysts for share price appreciation as passive funds rebalance.
• Evaluate jurisdictional risk separately: A world-class asset in a country with unpredictable policy shifts (e.g., sudden changes to royalty regimes, export bans on concentrates) may be less valuable than a slightly lower-grade asset in a stable, pro-investment jurisdiction like Botswana or Ghana.

For Mining Corporations

• Prioritize ” shovel-ready ” Assets: The highest-value targets in Africa are projects with existing infrastructure, permits, and community agreements. The premium for these assets is justified by the massive time and cost savings.
• Develop Strategic, Not Conglomerate, Portfolios: Clearly define 2-3 “strategic minerals” aligned with long-term trends and build critical mass in those. Divest non-core holdings to fund the core strategy.
• Forge Genuine Partnerships: The era of purely extractive relationships in Africa is ending. Successful long-term expansion requires partnerships with host governments, state-owned enterprises, and local communities that focus on shared value—local hiring, procurement, skills transfer, and infrastructure co-investment.
• Integrate ESG from the Start: ESG performance is now a direct factor in access to capital (both debt and equity). Projects must demonstrate robust environmental management, social license, and governance frameworks from the feasibility study stage onward.

For African Governments and Policymakers

• Shift from Resource Nationalism to Value Retention: The focus must pivot from simply demanding higher royalties or state equity in mines (which can deter investment) to creating an enabling environment for downstream beneficiation. This means investing in reliable power, ports, and rail to support smelting, refining, and manufacturing within the continent.
• Provide Regulatory Certainty: The single biggest deterrent to the advanced-stage project investments that the market now craves is regulatory flip-flopping. Clear, stable, and transparent mining codes and permitting processes are the most powerful tool to attract quality investment.
• Leverage the Current Cycle: The unprecedented cash flow from high commodity prices and the M&A boom should be channeled into national development funds, infrastructure sovereign wealth funds, and programs that build domestic technical and managerial capacity in the mining value chain.
• Negotiate for True Partnership: In negotiations with major miners, leverage the continent’s irreplaceable mineral endowment to secure binding commitments for local content, technology transfer, and post-mine land rehabilitation funds. The goal is to ensure that the “resource curse” is replaced by a “resource catalyst” for broad-based industrialization.

FAQ: Addressing Common Questions

Is the current gold price sustainable?

The structural support from persistent central bank buying and ongoing geopolitical risks suggests a higher floor than in previous cycles. However, volatility is inherent. Sustainability is less about a specific price point and more about the fundamental shift in reserve management, which points to a long-term upward revaluation of gold’s role in the global monetary system.

Why is M&A preferred over building new mines from scratch?

It’s a matter of risk-adjusted return and speed. Acquiring a permitted, resource-defined project bypasses the 10-15 year timeline and billions of dollars in exploration, feasibility, and permitting risk associated with greenfield projects. In Africa’s complex regulatory environment, this risk mitigation is invaluable.

Does this M&A boom hurt smaller exploration companies?

It creates a two-tier market. Major miners are buying the most advanced assets, often acquired by juniors who did the early exploration. This provides exit opportunities for successful juniors. However, early-stage, high-risk exploration becomes harder to finance, as capital flows to de-risked, near-production assets. This consolidates the sector around a smaller number of well-capitalized players.

How can Africa ensure it benefits from this mining expansion?

By moving decisively up the value chain. The greatest economic multiplier comes not from exporting copper concentrate or gold doré, but from exporting copper cathodes, gold ingots, and eventually, manufactured goods. This requires continental investment in energy, logistics, and skills—funded by the very windfall from the current commodity cycle.

Conclusion: The Institutional Imperative

The pursuit of gold and copper in Africa reveals a new, hard-nosed “common sense” in global mining. It is a logic of consolidation around scale, de-risking through advanced assets, and strategic alignment with immutable trends (monetary diversification, energy transition). This institutional depth—the preference for M&A over exploration, for indexed scale over fragmented ownership, for integrated commodity portfolios over single-metal plays—will define the next phase of the commodity cycle.

For Africa, this moment is both an opportunity and a test. The continent possesses the minerals indispensable to the 21st century. But the real prize is not just attracting the next wave of investment, but retaining the value generated. This requires a parallel institutional shift: from being a passive supplier of raw materials to an active participant in global value chains. The partnerships forged today—between global miners, African governments, and local stakeholders—must be designed for beneficiation, infrastructure development, and inclusive growth. The new common sense of mining expansion must be matched by a new common sense of African economic development. If achieved, this can be a once-in-a-generation opportunity to redefine the continent’s role in the global mining value chain permanently.

Sources

• World Gold Council. (2025). Gold Demand Trends: Full Year 2024. [Reports on central bank buying and investment demand].
• International Energy Agency (IEA). (2024). The Role of Critical Minerals in Clean Energy Transitions. [Provides data on copper demand projections for energy transition].
• Natural Resources Canada. (2024). Mineral Commodity Profiles: Copper. [Details on copper supply chains and demand drivers].
• African Development Bank (AfDB). (2024). African Economic Outlook 2024: Special Section on Mining and Resource Governance. [Covers policy trends and value retention strategies in Africa].
• Company