I give my outlook on the copper industry, and why I think it is a great place to invest your money for the next 1-10 years.
First we cover the macro effects that are affecting the entire precious metals and commodity sectors. Fiscal stimulus and expansion of the money supply is a great environment for real assets. Real estate, commodities, precious metals, all of these are going to benefit from the steady stream of stimulus we are seeing from governments all over the world.
As for copper, there are some specific factors for why I believe copper may be the biggest winner of all the real assets. The theme in all of it... clean energy. Only 17% of electric energy in the USA came from renewables last year, and with a democratic government in the states and a green energy sentiment expanding across the globe we will only see a rise in renewables energy and the increased investment into infrastructure to support it. Solar, wind and hydro-electric energy all require large amounts of copper to operate, not to mention the increased battery storage requirements to hold the energy after it is produced, until it will be consumed. This means an increased demand for all of the electric metals, most certainly copper. Middle of the road estimates call for an increase of 24M tonnes of copper per year, which would more than double the current global output at a little more than 20M tonnes per year. Analyst expectations say this demand would require a $1.7 Trillion investment into copper mining, which saw $600B in investment dollars from 2005 - 2018 in the last copper super-cycle fueled by the expansion of China. That's 3x the amount of investment, and likely these investments will not prove to be profitable unless we can see copper cross the $5 mark, putting upward pressure on the price of copper in the coming decade.
The EV space is another reason we will need so much copper. Not only do electric vehicles need electric infrastructure for charging, they use 3-5x the amount of copper as internal combustion engine vehicles. That is roughly 180 pounds of copper per electric vehicle. Tesla alone is predicting 884K - 1M cars produced in 2021, and all other car manufacturers are moving toward electric fleets as well. Not to mention buses and other electric options.
The final factor for copper is its anti-microbial qualities. Following the covid-19 pandemic I have seen a marketing campaign by some copper producers as to why copper should be used in all public places for things like door handles, railings or subway poles. Places were we have a lot of people touching the same surfaces. Copper is pricier than other options for these products, but following the covid-19 pandemic we may see the push for copper in these public places to reduce the risk of disease transmission and to improve public hygiene standards.
All in all, I see nothing but up for copper in the next decade, and see it as a great place for investment. Moving forward I am looking at doing a Precious Metalsd Monday segment, where each Monday I will cover a topic related to precious metals or mining stocks.
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**As always, these opinions are my own and do not make an investment decisions without consulting an investment professional.**