Barrick Gold's Lumwana Project: A Copper Growth Engine for the EV Era

As the world transitions to renewable energy and electric vehicles (EVs), copper demand is surging. Barrick Gold's Lumwana Copper Project in Zambia stands at the intersection of this global shift, offering investors a rare opportunity to capitalize on a low-cost, high-impact asset set to ramp up production just as demand peaks. Let's dissect the project's strategic value and why it could make Barrick a standout play in copper equities.

The Copper Demand Tsunami

The International Energy Agency projects that copper demand for EVs and energy storage systems could triple by 2040, while renewables alone will require 40 million tonnes of copper through 2050. This is no passing trend: every EV contains 83 pounds of copper, compared to just 23 pounds in a combustion engine car. Meanwhile, solar and wind projects require vast quantities of the metal for wiring and transmission.

The supply side? Less rosy. Despite robust exploration spending, global copper reserves have barely grown over the past decade, and top mines like BHP's Escondida are aging. Barrick's Lumwana Project aims to fill this gap, positioning itself as a Tier One copper producer with a 20-year mine life and the potential to deliver 240,000 tonnes of copper annually—a 100% increase from current output.

Lumwana's Expansion: A Strategic Masterstroke

The Lumwana Project's $2 billion expansion, now entering its feasibility execution phase, targets three critical goals:
1. Doubling processing capacity: Raising throughput from 27 million tonnes to 52 million tonnes per year, enabling higher-grade ore processing.
2. Extending mine life: The project's Super Pit development adds decades of reserves, reducing Barrick's reliance on higher-cost assets.
3. Cost leadership: All-in sustaining costs (AISC) are projected to fall below $1.50 per pound of copper, making Lumwana one of the lowest-cost copper operations globally.

The timeline is crucial: construction begins in 2025, with Phase 1 (targeting 45 million tonnes/year) online by 2028. By 2030, annual copper production should hit 240,000 tonnes, aligning perfectly with peak EV and grid infrastructure demand.

Why This Matters for Barrick's Valuation

Barrick has long been a gold giant, but its pivot to copper via Lumwana could redefine its valuation. Here's why:
- Diversification: Copper now accounts for 20% of Barrick's EBITDA and will grow as Lumwana ramps up.
- Free cash flow: At current copper prices (~$3.50/lb), the project could add $500 million annually to Barrick's coffers by 2030.
- Peer comparison: While peers like First Quantum Minerals (FM) trade at 1.5x net asset value (NAV), Barrick's undervalued copper assets could unlock upside.

Critics may point to execution risks—delays, labor disputes, or lower grades—but the project's feasibility study (completed late 2024) and Zambian government support reduce these concerns.

Investment Thesis: Buy the Dip Ahead of the Ramp-Up

The strategic case for investing in Barrick now is compelling:
1. Timing: The stock has underperformed copper prices in 2024, creating a valuation gap.
2. Leverage to copper: For every $0.50/lb rise in copper prices, Barrick's earnings jump by ~15%.
3. Dividend stability: Barrick's 2% yield offers downside protection while waiting for the Lumwana payoff.

Risks? Certainly. Copper prices could drop if China's demand slows or if global growth stumbles. However, with $10 billion in liquidity and a conservative balance sheet, Barrick can weather short-term volatility.

Conclusion: A Foundation for Long-Term Gains

Barrick's Lumwana Project isn't just an asset—it's a strategic cornerstone for the EV era. Investors seeking exposure to copper's secular boom should consider adding Barrick ahead of its 2025 construction phase. While the stock may face near-term headwinds, the 2028 production surge and its long-term cost advantages make it a buy for portfolios needing growth and diversification.

Actionable Takeaway: Accumulate Barrick Gold (GOLD) on dips below $20/share, with a target of $28 by end-2026, assuming copper stays above $3.25/lb. Pair this with a long position in copper futures (HG=F) for maximum leverage.

The EV revolution isn't waiting—neither should investors.