Metals Prices To Rise, Mining Needs Makeover, Expert Says

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Kitco Mining Disclosures

Disclaimer: Videos are not trading advice, and the views expressed may not reflect those of Kitco Metals Inc.

The commodity cycle has begun ascending from its bottom, Rob McEwen, chairman and chief owner of McEwen Mining Inc. (MUX:TSX; MUX:NYSE ), said in an interview at the recent 2025 Mines and Money Conference.

"I'm expecting higher prices in copper and gold. There's a lot further for them to run," McEwen told Paul Harris, Kitco senior mining editor and anchor.

For the past 34 years, McEwen has helmed several gold mining companies, including Goldcorp Inc., which he founded and took to an US$8 billion market cap. His latest venture, McEwen Mining, owns three producing gold-silver mines in Nevada, Ontario, and Argentina. Subsidiary McEwen Copper owns the Los Azules copper project, also in Argentina.

Looking forward, the key catalyst for the gold and copper prices, McEwen opined, is ongoing geopolitical tensions, which have left customers wondering where to source metals. He also cited insufficient production to supply projected demand, underinvestment in the sector, and weaknesses in fiat currency.

He predicted that more investors will enter the space and mergers and acquisitions activity will pick up once the copper price breaks through US$3,000 an ounce.

"In the midtier, there'll be more consolidation as in the juniors," he added. "I think there'll be a lot of juniors that people are going after."

As for why bigger companies have been investing billions of dollars into expanding their existing operations instead of acquiring smaller companies, McEwen posited a key reason may be the time it takes to get a project permitted and brought online. In the other scenario, companies can add production right away.

"I think is an easy choice right now, to expand existing rather than buying new," he said. "But that'll change as the prices improve."

Los Azules: Example for the Future?

McEwen fielded questions about the Los Azules project in San Juan, Argentina, for which McEwen Copper has applied for acceptance into the country's RIGI, or Large Investment Incentive Regime.

The goals of RIGI are to attract capital to Argentina and boost employment opportunities, particularly long term jobs typical in the mining sector. The benefits to qualifying companies include a lower tax rate, the removal of foreign controls and a 30-year stability agreement on tax. McEwen commented that RIGI is working.

"You saw right after it was announced that BHP Billiton Ltd. (BHP:NYSE; BHPLF:OTCPK) came in and did a deal with Lundin Mining Corp. (LUN:TSX) for US$4.5 billion ($4.5B), Rio Tinto Plc (RIO:NYSE; RIO:ASX; RIO:LSE) stepped in with a US$6.7B investment in lithium," he said.

Were Los Azules approved for membership in RIGI, McEwen noted, "it would be an increase in our net present value by a third, so we'd move from US$2.9B to US$3.8B, plus a number of other benefits. For us, it's very positive."

If an approval comes before the project feasibility study, now in progress, is completed, the associated economics will be included, McEwen said Otherwise, they won't be. Once approved, the mining company is required to start production within a few years' time.

The plan is to develop Los Azules in a wholly sustainable way, which Harris described as being "radically different" from the industry norm, with advanced mining facilities, and a hotel and visitor's center at the project, blending into the desert landscape.

"Los Azules is designed to be distinctly different from a conventional copper mine by consuming significantly less water, emitting much lower carbon, progressing towards carbon neutrality by 2038 and being powered by 100% renewable electricity once in operation," a news release described.

McEwen told Harris: "What we're looking to do is create a jewel on the side of a mountain rather than a scar. We are going to dig a hole there, but after closure, there are multiple uses that we're planning for this operation."

McEwen thinks such an approach is important, at this time, to change the public's perception of mining as environmentally harmful and "bad," ultimately to get local communities, states/provinces, and countries to rally around and be proud of mining projects in their midst and to attract desperately needed new talent to the industry. "I'm proud of that; it's environmentally sensitive; it's comfortable to work in; it's attractive to look at"—these are the kind of sentiments the mining industry wants about its projects, McEwen said.

The extra cost involved to develop a project the community accepts is well worth it, McEwen added, particularly after a company has spent millions of dollars exploring and advancing it to the point of building a mine.

"We just have to adjust to the change," the CEO said. "We have to all live in this world and be comfortable with it, not damage it."

Los Azules will make money, McEwen noted. Producing about 400,000,000 pounds of copper a year at the low cost of just over US$1 per pound, revenue would be about US$1.6B at current copper prices. Of that, costs would be about one-quarter of that. The gross margin is about 75%.

"Your timing seems to be exquisite," Harris told McEwen. "Copper futures are up US$4.50, US$4.80 a pound with a supply deficit forecast coming in the years to come. The likelihood is that that price is only going to increase, so bringing on a new mine into that environment . . . well, you couldn't have timed it better."

"It seems to be a good time," McEwen agreed. "Demand for copper is going up, whether it's for data farms or the electric vehicle transition and the lack of investment in earlier days."

McEwen knew the Los Azules asset, with 37,600,000,000 pounds of copper, had tremendous value as far back as 10−15 years ago, during a long bear market, and as a result, his company's treasury was low, he said. Despite receiving some inside pressure to sell and numerous bids from majors looking to buy the asset, he refused to sell it.

"These people came in with offers. They're just dangling it out in front [like] 'grab it, grab it, you need money.' I said, 'Get out of here.'"

Mining Could Elevate its Look

Mining could use an overhaul in the way it portrays itself to the public, investors, and other industries, McEwen said. The industry would benefit from more excitement, authenticity and tossing out of outdated, traditional ways of capturing and keeping people's attention and interest.

Mining company CEOs should be visibly excited about the industry and their company, and their words should align with their actions, he opined. For instance, a company should not be touting gold's rising prices and at the same time, hedging its gold production for cash.

"You need enthusiasm for this business. You have to be an optimist. You want to have some knowledge of the market. You want to be acting in the same way you feel the market's going," McEwen said.

It might go a long way, with say generalist investors whom the mining industry wants to attract, if mining companies were to hold gold on their balance sheet and let it appreciate, or if they became "sort of a physical gold exchange-traded fund" or offered a larger dividend, noted McEwen.

When it comes to shows and conferences, perhaps mining could incorporate some ideas from the tech industry of how to put on a fun, energetic event and generate buzz and interest, particularly since mining uses so much technology, McEwen posited.

"Maybe we need more just visual displays, more technology being shown in the shows," he said. "I can see a day when we're going to be using more robots in the mine and a lot more automation and autonomous vehicles. But we probably need more graphical depiction of that, more movement."

Another possible idea, he said, is having booths at the conferences for all the various companies servicing the mining industry, describing their business and showing their contribution.