The capital needed to develop new mines has shot up some 50% to between $3 billion-$4 billion on average in recent years, fuelled by declining ore grades, stricter environmental requirements and rising labour costs.

Copper producers increasingly want to share the risk and costs of projects, and the sector has already seen a jump in M&A activity, which more than doubled year-on-year to $14.24 billion in 2022.

But big-ticket M&A is not the only solution to rising costs, and partnership deals are also being mooted, five sources familiar with the matter said.

For investors interested in the green transition, that would allow them to own a portion of existing assets and revenues at a time when large reserves of top-grade material are hard to find.

Miner and trader Glencore (GLEN.L) has been approached by potential investors in its Argentine copper projects Minera Agua Rica Alumbrera (Mara) and El Pachon, two sources said.

Japan's Sumitomo Metal Mining (5713.T) is among interested parties, one said. According to Argentine government data, the projects could produce a combined 435,000 tonnes of copper a year.

Glencore declined to comment, while Sumitomo did not respond to a request for comment for this story. Both sources declined to be named because the information is not public.

Canada's Lundin Mining (LUN.TO) is also in talks with Japanese trading houses and large miners to offer a 40% to 50% stake in Argentina's Josemaria mine, incoming CEO Jack Lundin told Reuters this month.

Interested parties include the world's largest listed mining company BHP Group (BHP.AX) and Sumitomo, one source said. BHP also declined to comment.

"I think the world understands that demand is increasing for copper. I don't think they understand the difficulty in the challenges of maintaining supply, or bringing new supply on," Lundin said.

"This is where we really have to dig deep, and look at bringing down costs."

COST INFLATION

In Chile, Canada's Capstone Copper (CS.TO) is preparing to sell a 30% stake in its Santo Domingo copper-iron-gold-cobalt project, while Hudbay Minerals (HBM.TO) is seeking minority partners for its open-pit Copper World mine in Arizona, two sources familiar with the matter said.

A Capstone spokesperson said once the feasibility study for the project is completed this year, it will progress the financing plan, which could include a sale of a partnership stake. Hudbay did not respond to a request for comment.

First Quantum meanwhile has struck a deal to buy a majority stake in Rio Tinto's La Granja copper project in Peru for $105 million, and committed to invest up to $546 million in the joint venture.

It is also looking for investors at its Taca Taca copper-molybdenum and gold project in Argentina, two of the sources said. First Quantum declined to comment.

Professional services firm EY said a review of 132 development projects requiring more than $1 billion of capital investment showed nearly one in five faced cost overruns, with an average blowout of $500 million.

Recent volatility has exacerbated the problem of capital productivity that has long concerned the mining sector, its Global Mining & Metals Leader Paul Mitchell said. "As well as increased input costs, higher interest rates are pushing up the cost of capital," he added.

Most analysts expect the copper market to be in deficit from 2027 due to increased demand for electric vehicles and renewable infrastructure.

But that could take years to feed through into fatter margins for producers, said Farid Dadashev, head of EMEA metals & mining at RBC Capital Markets.

"One way to reduce project development risks and multi-billion dollar investments is through forming a joint venture with strategic or trading partners," he said. He declined to give details on the current deals pipeline.