Geopolitics, capital and copper dominated discussion at Hamilton Locke’s Mines, Markets and M&A Forum last week, hosted with BDO and VECTOR Advisors, featuring a keynote address from US Consul General to Western Australia Colleen Altstock and a panel discussion with Rob Gray (Chief Commodity Strategist, Resource Capital Funds), Jon Greenaway (Market Director, Control Risks) and Paul House (CEO, IMDEX).
Set out below are five key themes from the forum likely to shape the resources sector moving forward.
Need to know:
- The US is positioning critical minerals and AUKUS cooperation at the centre of its strategic relationship with Australia, backed by significant public investment intended to crowd in private capital.
- The supply-demand gap is structural, driven by geopolitical instability with no clear end in sight.
- Copper remains the standout commodity, with diversified demand and constrained supply underpinning a constructive outlook.
- Resource-rich countries increasingly require investment in local processing and value-adding, rather than raw export.
- Royalty changes, approval delays and labour shortages are cooling M&A appetite in Australia relative to other jurisdictions.
Colleen Altstock on AUKUS and the new strategic economy
In her keynote address, “Navigating the New Strategic Economy: Geopolitics, Resources and Australia’s Next Wave of Growth,” Consul General Colleen Altstock identified advancing AUKUS and securing critical minerals supply chains as central to the current US intent in the relationship with Australia, underpinned by commerce and people-to-people ties as much as formal agreements. She pointed to Western Australian capital supporting critical supply agreements, semiconductor minerals, energy and defence, and to a growing government role in reducing risk across supply chains. Approximately $5 billion in US investment is directed at establishing projects, with public investment intended to initiate activity and private investment then used to scale it up. Consul General Altstock also referred to the joint US-Australia Security of Supply Response Group, identifying strategic financing, minerals, infrastructure, technology and people as the areas in which Western Australia has the most to contribute.
A structural shift, not a cycle
Paul House opened the panel discussion by identifying a pronounced sense of urgency building around a looming gap between global supply and demand, driven by geopolitics and compounded by the challenge of de-risking supply chains within a high-inflation environment, with technology increasingly regarded as part of the solution. This urgency does not reflect a temporary feature of the market cycle, but a fundamental mismatch between accelerating demand for critical commodities and the considerably slower pace at which new supply can be brought to market.
Jon Greenaway described the geopolitical backdrop as effectively permanent, pointing to the ongoing corridor of uncertainty across the Middle East and Ukraine, both frozen conflicts with little prospect of near-term resolution. Businesses and investors should plan on the basis that this disruption persists, rather than waiting for conditions to normalise. He also highlighted the resilience mining companies have demonstrated against economic pressures such as inflation, and noted that the pace of technological change over the next decade is expected to drive elemental demand, including for copper, with the speed of risk and opportunity now unprecedented.
Copper keeps winning
Investor sentiment is currently divided, with capital leaving parts of the market on account of risk even as new capital enters from government and from technology companies seeking to secure the source of their own products. This raises the broader question of where capital is coming from, with private equity identified as a likely contributor while public markets remain subdued. Traditional public market investors remain cautious, while a new category of strategic investor – government and end-use technology companies among them – continues to deploy capital, increasingly filling the funding gap left by softer public markets.
On copper specifically, Rob Gray offered a constructive view underpinned by diversified demand spanning electric vehicles, data centres and defence, together with scope for substitution into alloys. Copper is the one metal every major player is currently seeking, with exploration in the commodity already representing an estimated 23 to 30% of the exploration market, and growing interest and due diligence increasingly directed at South America as a result. What distinguishes copper from the other commodities discussed is the breadth of its demand base: electrification, data infrastructure and defence applications are all drawing on the same constrained pool of supply concurrently.
Supply chains now mean owning more of the value chain
Security of supply is increasingly treated as a whole-of-value-chain issue rather than a question confined to the mine gate, with redundancy and a security-focused view across the supply chain now central to geopolitical risk analysis. Jon Greenaway raised the pointed question of which commodities China does not hold, in the context of what he described as an increasingly G20-level contest for minerals.
A clear shift is emerging in what resource-rich countries are prepared to accept: rather than exporting raw ore, a growing number of governments are requiring that investment be directed into local processing and value-adding, with Asia and Africa identified as the markets where this trend is most apparent. This raises a genuine question about the extent to which Australia itself needs to build further metal purification and processing capability. For Western Australian companies and investors accustomed to a straightforward extraction-and-export model, this represents a material shift in how transactions in these jurisdictions need to be structured and priced.
Royalties, approvals and labour are cooling local M&A appetite
Comparing the Australian risk perspective to international alternatives, panellists identified changes to the royalty regime, lengthy approval timeframes and the availability of skilled labour as factors cooling investment interest domestically, alongside the prevailing regulatory regime more broadly. Investors require greater clarity on the pace and direction of regulatory change before committing capital, extended approval timeframes are increasingly priced in as a cost of operating locally, and even well-capitalised projects are now constrained by the availability of the specialist labour required to construct and operate them.
South America is increasingly open to investment, although political stability in the region remains a genuine consideration rather than a resolved issue. Even so, Western Australia continues to do what it has always done well in attracting investment into commodities, with the jurisdiction’s underlying fundamentals remaining intact even as competition for capital intensifies.
On the direction of future transactions, diesel supply is likely to remain in a supply crunch until the conflict in the Middle East concludes. Discussion also turned to greenfield exploration versus existing production in an M&A context, with Paul House remarking that there is a building consensus that M&A is often a faster means of accessing additional reserves than exploring for them. The cost of capital for brownfield and greenfield projects is now broadly comparable, prompting traditional producers to reconsider how they acquire and produce resources, and a substantial weight of capital remains directed at gold.
Closing the discussion, panellists weighed grade against jurisdiction and producers against developers as the key considerations for investors going forward. Hyperscale data demand and the accelerating application of technology within mining were identified as key drivers of future activity, alongside the role of government in energy security and national security, with sulphur also raised as a commodity to watch.
Geopolitics, capital markets and technology are no longer separate considerations for those operating in the Western Australian resources sector — they are, increasingly, a single, interconnected set of dynamics.
We thank BDO and VECTOR Advisors for co-hosting the forum and contributing to this article and look forward to continuing to support our clients as the market evolves.
