Another Top Miner Predicts Copper 'Super Cycle' Amid Supply Shortage Fears Trigger By Energy Transition

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by Tyler Durden
Wednesday, Jun 28, 2023 - 09:20 PM

Despite concerns about weak Chinese factory data and increasing risks of a global hard landing sometime in 2024, Eurasian Resources Group's (ERG) chief executive officer Benedikt Sobotka said the world's appetite for copper is set to soar and might even exceed supply over the next decade unless new mines are built. The demand increase is due to the ambitious energy transition goals set by governments. 

On Wednesday, Sobotka told Bloomberg TV in an interview at the World Economic Forum's Annual Meeting of New Champions that copper miners must increase supplies. He said new mines are "more challenging and located in expensive jurisdictions, which will require higher prices to offset increased costs." 

"You have this demand coming, and you have all these challenges in building out more mines," Sobotka warned at the event in China's Tianjin area. He forecasted that a "perfect storm" might unleash "another super cycle." 

Sobotka's concerns were shared with billionaire mining investor Robert Friedland earlier this week. He told Bloomberg TV that the mining industry needs to increase supply ahead of 'accelerating demand.' He said deposits are getting more expensive and harder to find, funding is limited, and economies have to prepare for the importance of the mining industry to lead the energy transition. 

"We're heading for a train wreck here," Friedland said at Bloomberg's New York headquarters on Monday. 

He's the founder of Ivanhoe Mines Ltd. and warned: "My fear is that when push finally comes to shove," copper prices might explode ten times. 

BloombergNEF estimates demand for refined copper will grow 53% by 2040, but mine supply will climb only 16%. 

In a separate report, S&P Global said electric vehicles require twice as much copper as an internal combustion engine vehicle. And noted copper demand will double to 50,000,000 metric tons annually by 2035, more than all the copper consumed worldwide between 1900 and 2021.

Copper prices have yet to sustain a breakout pattern over the past decade high and have recently slumped on a disappointing China economic recovery. 

"Resource nationalism and the difficulties in moving materials around the world, critical raw material initiatives that are competing with each other, ESG requirements — they're going to make delivering these volumes of materials in the future more difficult," Sobotka pointed out.

In March, Jeff Currie, global head of commodities for Goldman Sachs, told Financial Times that copper's "forward outlook is extraordinarily positive" and "peak supply occurring in 2024."