Are gold miners like Evolution and Newmont the future of Australian copper mining?

It is said that the dinosaurs never really went extinct. Instead, they evolved into birds.

Tyrannosaurus rex and velociraptors are now believed to have had feathers. The cassowary, with its enormous, clawed feet, offers perhaps the closest modern glimpse of what some ancient dinosaurs may have looked like.

We’re fast entering a world where gold miners could be going the way of the dinosaurs. Rather than disappearing, they’re evolving into copper miners.

The asteroid strike that triggered this evolution was gold bullion ETFs, which entered the atmosphere in 2003.

Prior to bullion ETFs, gold miners often enjoyed premium valuations because they were one of the only practical ways for generalist investors to trade the gold price. But gold ETFs changed that, allowing investors to trade gold directly.

As a result, many gold miners have increasingly looked toward copper, using today’s record gold prices and cash flows to help fund the transition.

Ring of Fire and porphyry – the tie that binds

The shift from gold miner to copper miner is made easier by porphyry deposits.

Porphyry deposits are among the most valuable ore systems in global mining. They commonly contain both copper and gold and are especially prevalent around the geologically active Pacific Ring of Fire. A major example is the Grasberg mine operated by Freeport-McMoRan in Indonesia.

Porphyries mean that copper miners are often also gold miners and vice versa. When a deposit contains economically recoverable quantities of both metals, miners generally extract both.

Australia sits outside the modern Pacific Ring of Fire, but it hosts older porphyry systems formed hundreds of millions of years ago. The prime example is the Cadia Valley operation in New South Wales. This deposit may hold the key to understanding how gold miners plan to evolve into copper miners.

Newcrest and Cadia – a blueprint for global miners?

The jewel of Newmont’s (ASX: NEM) Australian portfolio, Cadia is one of the most profitable gold mines on the planet. While classified primarily as a gold mine, a major reason for its profitability is its copper production.

Cadia is so rich in copper that, in some years, analysts have estimated the mine generated more economic value from copper by-products than from gold itself, depending on prevailing commodity prices and cost allocations.

Copper exposure was a major reason Newmont acquired Newcrest Mining in a deal valued at roughly US$19 billion, completed in 2023. Newmont has stated ambitions to materially increase its copper production this decade, targeting around 200,000 tonnes annually from its Australian operations over time. For context: Sandfire Resources is on track to produce about 114,000 tonnes of copper in FY2026.

Barrick Mining is heading in the same direction. CEO Mark Bristow has repeatedly emphasised copper as a strategic growth commodity. This is reflected in Barrick's annual report, which shows copper volumes rising and copper providing a growing revenue contribution.

In Australia, we’re seeing the same thing. Evolution Mining (ASX: EVN) has increasingly pursued a copper-gold hybrid strategy centred on its Ernest Henry operation in Queensland. In recent reporting periods, copper contributed close to 30% of group revenue.

Meanwhile, Harmony Gold is developing the Eva Copper Project in Queensland. Harmony has stated that its Australian copper assets could ultimately produce around 100,000 tonnes of copper annually within several years.

Why now?

The valuation discrepancy between gold and copper miners is a major reason.

In recent years, the market has started rewarding copper miners with richer valuation multiples than gold miners. More important than levels though is the trajectory: multiples for copper assets are rising, while multiples for gold assets are falling. And doing so despite a surging gold price.

At the same time, record gold prices have dramatically boosted free cash flow generation across the gold mining sector. That gives gold miners the firepower to acquire copper assets, particularly smaller copper developers and juniors.

Indeed, part of the premium attached to many junior copper companies likely reflects expectations they may eventually be acquired by larger gold miners.

Conclusion

The irony is that gold’s resurgence may ultimately accelerate the transformation of many gold miners away from gold. In that sense, the future of Australian copper mining may not belong primarily to traditional copper miners at all, but to evolved gold miners flush with cash and looking to pivot.

The ETF Shares solution

At ETF Shares, we are tracking this transition with great interest. We developed the ETFS Global Pure Play Copper Miners ETF (ASX: CPPR) with a specific 30% copper revenue filter to facilitate the inclusion of miners like Newmont and Barrick as they pivot toward copper.