Forum Topics Copper
Mujo
one year ago

Macquarie on Copper:

 In conclusion, there is a significant opportunity for increased scrap processing to feed into the supply demand balance going forward. This will come from an increased base level as the world moves towards a more circular economy, together with scrap’s ability to respond in the short term to higher prices when the market is tight.

The magnitude of the structural deficit for copper is such that scrap alone is not going to be sufficient to fill it, but combined with new greenfield and brownfield projects (Copper projects: 1.0Mt of additional supply could be approved this year) and technologies currently under development to increase recoveries and / or make lower grades economic (Filling the copper supply gap: the potential of lowgrade sulphide leaching), it is plausible that the hypothetical supply gap will continue to remain just on the horizon. By definition, the market will ultimately balance but, as always, prices will need to do the heavy lifting of both incentivising this supply and, most likely, generating incremental demand destruction through thrifting and substitution.

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loshell
one year ago

I've had Sims (ASX:SGM) on my research list for a while and this sort of commentary is a good reminder to actually get around to looking at them more closely. Has anyone here taken a look at Sims?

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Remorhaz
one year ago

Damien Klassen from Nucleus Wealth has penned another well thought out contrarian view on Copper - posted on Livewire:

The great copper panic

...

The upshot of all of this is that if you are sure that:

  • Electric vehicles will switch to less efficient but cheaper induction motors
  • Battery compositions will be largely unchanged by 2040
  • Driverless cars are more than 20 years away from mass adoption
  • People will break the trend of the last decade and start using more copper per person for other products
  • Chinese housing construction will bounce back to prior boom levels
  • Copper will remain dominant in grids
  • Electricity grids will expand worldwide, with only limited localised grids


then copper is probably the right commodity for you

If you have doubts over any or all of these, you might not want to go all-in on copper investments


DISC: I hold a little SFR both IRL and on SM


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Timocracy
one year ago

We're disconnecting all the gas lines to our place because we have installed a great solar array and hoping to have an EV to back-charge in the next 24 months. There should be plenty of copper piping going off to the recycling facility!!

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Mujo
one year ago

Yeh I imagine the truth is somewhere in between. For the price to do well we only need the narrative to take hold in any case - looking at lithium etc.

I bought some SFR IRL and a small positon on SM as don't usually do miners.

I do read Damien's stuff every now and then but they seem to be perpetual bears on most things and not the best with that track record.

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Mujo
one year ago

I thought I'd try and dig up what I can given the long term thesis really centres on EVs - there seems to be so wildly different estimates. This one soruces the IEA which Damien quotes saying it was only 1.5x but they say well over that in their estimate.

I think some of the discrepancy is some are putting in the cost of charging stations as well in the calculation.

18638615406c518a11eae34570c9c8e0c2f642.png

A6192_ElectricVehicles-Infographic.pdf (copper.org)

Of course this is by the Copper Development Association so just a bit of bias.

Another source from Reddit - According to a study by Argonne National Laboratory, 1.15% of an EV (by curb weight) is made of copper (this is for the whole vehicle, not just the motor, and most copper will be in the battery wiring - extruded copper).


A Tesla Model-Y weights 4,416 pounds, so it should have about 66.25 pounds of copper in it.

This would put it about 1.5x at the top end of the conventional car using the above.

I guess the other part of the debate is the supply side where there is degrading quality.

In any case probably more confused than ever about what the true story is.

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Mujo
one year ago

The copper price jumped on Friday as rumors swirled about China loosening its strict covid-19 measures.

Copper enjoyed one of its best trading days in years surging 7.9% in New York to exchange hands for $3.697 per pound ($8,150 a tonne) in midday trade, a 10-week high for the December Comex contract.

Copper price back above $8,000 on China reopening hopes - MINING.COM

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Mujo
one year ago

Looks like Global X (previously ETFS securities) is looking to launch a new low cost physcially backed GOLD ETF as wll as a Copper Miners ETF shortly.


Invest in one of the world’s most versatile commodities, copper, through the Global X Copper Miners ETF (ASX: WIRE).

Copper has been a cornerstone of social and technological innovation for more than 10,000 years. It remains a vital input for numerous industries and is set to continue as a key commodity well into the future, thanks to its properties as an electricity and heat conductor, and resistance to corrosion.

Our new fund WIRE will provide access to a global basket of copper miners which stand to benefit from being a key part of the value chain facilitating global growth in major areas of innovation such as technology, infrastructure and clean energy. 

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Timocracy
one year ago

I feel like all the paint colours in the world have now been named and the people who had those jobs shifted to work for ETF companies :'D

6

Mujo
one year ago

Anything that's hot and they can flog to get FUM quickly.

8

edgescape
one year ago

Damien Klassen is also part of Macrobusiness.

I cancelled my membership years ago because they don't teach you anything on investing or looking for something that is under the radar or undervalued.

They only post macro views and views on govt policy rather than showing where you can keep your money "safe" or give a few investment ideas. I can get my macro views anywhere for free from twitter, zerohedge, tradingeconomics etc.Why do I need to pay for that?

If you listened to the views on commodities and shares in various sectors, you'll miss out on the upside on all the listed explorers that have made significant discoveries or all the corporate activity that is currently happening in the commodity space. They even get where the main indexes are heading wrong.

Have to add, I also made the mistake about listening to them about IGO when they keep saying it should be down more because Gold prices are going down.

In the past they used to be good and even put out some of the sell side research reports from the Morgan Stanley, Goldman Sachs and JP Morgan.


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Chagsy
one year ago

yup @Mujo


asx:wire is out, up 10% in the last month, 17% since inception

main holdings:

e652a4d2d76e554405d98f8b7b50ab4d29c768.png

copper itself is up a fair bit in the last few months86e7364702f445a51a682da53d972725c36c80.png

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Mujo
one year ago

Thanks@Chagsy! I think it is a multiyear theme and one I plan on following, good to know there's an easy ETF to play the basket approach.

5
Mujo
one year ago

I think we've seen numerous articles and home it's not group think but another fund manager 718a37_3bc0278b487a4c69988e2ef2f44627ca.pdf (oldwestim.com)

"In our view copper prices will likely have to at least double from here and stay elevated to give the proper signal for additional investment in new supply. We believe structural supply deficits in many commodities will lead to sharply higher prices in the coming years, even if current market conditions suggest otherwise. This disconnect between short term concerns and long term fundamentals presents a compelling opportunity for investors, and we have been actively raising capital to deploy into these areas. "

And then on Livewire - The growing disconnect between copper stocks and outlook for copper demand-supply - Barry FitzGerald | Livewire (livewiremarkets.com)

Freeport Preso:

b3b1216824f36dfb953891d01f6126e5c1ad31.png

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Chagsy
one year ago

Copper bosses warn of supply threat to climate ambitions

World’s biggest listed producer says shortage will make it ‘very difficult to meet aspirations’

5 hours ago

Newly formed copper cathode sheets at a smelting plant in Poland. The metal is crucial for ‘greening’ the economy © Bartek Sadowski/Bloomberg

Global plans to electrify economies and cut carbon emissions could be slowed down by copper shortages, the head of the world’s largest listed producer of the metal has warned.

Richard Adkerson, chief executive and chair of US mining group Freeport-McMoran, said surging global demand for copper for the rapid rollout of electric cars, renewable electricity and power lines would cause a shortfall.

“There is going to be a very significant shortage in copper,” he said. “It’s going to be very difficult to meet the aspirations that have been set.”

Copper is crucial for “greening” the economy because of its ability to conduct electricity. An electric car can use three times the amount of copper as a combustion engine counterpart, while renewable energy projects tend to need five times the volume of the metal as traditional gas, coal and nuclear power plants.

In a report issued last week, consultancy Wood Mackenzie said 9.7mn tonnes of annual supply needs to come from projects yet to be sanctioned over the next decade. The market size is currently 25mn tonnes a year.

“To date, a shortfall of this magnitude has never been overcome,” the authors wrote, predicting that $23bn of annual investment in new projects was needed, two-thirds more than the average over the past 30 years.

Maximo Pacheco, chair of Codelco, the world’s largest copper producer, told the Financial Times he expected a deficit of 6mn-7mn tonnes of copper over the next decade.

Codelco has been struggling to maintain output at its mines, with Pacheco saying it would not be able to recover to last year’s production levels for up to four years. “It’s a tremendous effort to replace the resources.”

Mining executives say the supply challenge is compounded by the downturn in the global economy, which has dragged copper prices lower and led commodity strategists to predict a market surplus next year.

“This current economic turmoil is only making the problem worse,” Adkerson said. “Companies are reluctant to invest in today’s world.”

Visible copper stocks, which make up a small fraction of the inventory held but heavily influence purchasing managers’ decisions, are running at record lows, creating a risk of volatile price changes. 

Geopolitical tensions are also shaking up supplies of metals, including copper. Industry executives said the shunning of Russian supplies had led to a more immediate scramble in Europe, where buyers have been willing to pay hefty premiums or sign longer-term deals to secure material.

Copper producers say a host of factors from lengthy government permitting processes and projects where extraction is more difficult to a lack of shovel-ready projects makes it challenging to meet long-term demand growth.

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Jonathan Price, chief executive of Teck Resources, which is developing one of the world’s largest copper projects in Chile, said at the FT Mining Summit last week that “the equation just doesn’t add up” between the rise in demand and obstacles for new supply.

However, a supply response by increasing production from scrap copper could ease some of the pressure, and Adkerson said unforeseen technological advances could also unlock supply.

“If we just stick with today’s technology and you look at the challenges, the aspirations are outrunning the reality,” he said.

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Jimmy
one year ago

@Chagsy I've also been reading a bit lately regarding the potential copper shortage and there seems to be a few ways to play this. One I like and have taken a 1/2 position in so far is Havilah Resources Limited (ASX: HAV) a Sth Australian mineral exploration company in the process of transitioning to a mine operator.


This is the announcement that caught my attention: OZ MINERALS OPTIONS KALKAROO PROJECT AND INITIATES A STRATEGIC ALLIANCE WITH HAVILAH:

 HIGHLIGHTS:

A conditional binding Terms Sheet executed with OZ Minerals Limited (OZ Minerals) in relation to a Proposed Transaction comprising: An 18 month option (Kalkaroo Option) to purchase the Kalkaroo copper-gold project (Kalkaroo) for $205 million

A Strategic Alliance to explore for copper in Havilah’s extensive prospective tenement holding in the Curnamona Province of northeastern South Australia.

Subject to exercise of the option, and achievement of certain milestones, additional contingency payments potentially amounting to $200 million may be payable to Havilah, meaning that up to $405 million could be realised for the Kalkaroo project over time.

Under the Strategic Alliance OZ Minerals commits funding of up to $18 million to Havilah during the Option and Alliance Period, at least half of which would be directed towards exploration for new copper deposits.

Havilah will seek shareholder approval for the grant and exercise of the Kalkaroo Option (Kalkaroo Transaction) at a Shareholder Meeting, which must be held within 90 days of the Terms Sheet date.

What is also interesting is that some numbers bandied around recently estimate that if OZ take up the option it would add ~$0.70cents per share to the HAV current share price of ~$0.30cents.

Havilah shareholders approve Kalkaroo Option:

Havilah Resources shareholders approve the grant of the option for OZ Minerals to acquire the Kalkaroo project.

Kalkaroo is at pre-feasibility study stage and is potentially one of Australia’s largest undeveloped open pit copper-gold deposits.

Havilah PFS demonstrated potential 30ktpa copper and 72koz gold over initial 15-year mine life.

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