New Energy Weekly – Sprott Podcast
The latest Sprott Radio podcast is out
The latest Sprott Radio podcast, put out by Sprott Asset Management, featured Wood MacKenzie’s Nick Pickens. He’s the Research Director for Global Mining at Wood MacKenzie. And their subject was copper. It’s a good listen, but for those of you who want the highlights, here you go…
Much of Nick’s comments will feel familiar to New Energy readers:
Clearly, a lot of the focus at the moment is around energy, and metals fit into that picture better than they ever have. It’s a combination of our energy and mining/metals teams. Our mining metals side is really focused on the outlook for the energy transition.
This could be straight out of any of our publications. Metals are critical to the energy transition. And copper is the most important:
It has been a long time since we started to see these new technologies building out and building into our models and our thinking about how copper might be used in any of these. But if you think back even only five years ago when people talked about EVs, it was something that most people took with a pinch of salt. It’s really gathered momentum over the last three to four years in really quite an incredible way. As I say, we are embarking now in what’s really quite an amazing journey for metals and for copper, in particular, and we are truly seeing a structural change.
It’s not just copper. There’s an awful lot of different metals that are going to be involved in the shift away from fossil fuels and from hydrocarbon. One thing is for sure, if you look at every end-use involved in that energy transition, it’s pretty hard to find one that doesn’t need copper.
Nick points out one of the important points in the mining industry – capital demand. Mining requires a lot of investment, just to keep the metal coming out of the ground. It takes even more to find and develop new deposits:
It’s not unusual in the copper market to see a gap emerging. You need continual capital investment to continue to generate projects and growth, but we look on a 10-year timeframe, and that gap is looking around about five to six million tons on our base case. This is out of a market where total consumption is around 30 million tons. If we want to achieve zero-carbon targets that have been laid out in the Paris Agreement, the supply that needs to come online rises to something more like 10 million tons in 10 years’ time. Now, the market has never, ever achieved that amount of growth in that timeframe in the history of copper project development. That’s the challenge.
Nick’s saying here that Wood MacKenzie’s base case is a 17% to 20% supply deficit. And the net zero targets make that much worse. He wraps up the podcast with the same takeaway that I have:
Look, I think this theme isn’t going away, and if anything, it’s gathering momentum.
This is a good listen. And they cover a lot more information. So, if you have a minute, I recommend giving this a listen. Copper is a theme I’m hammering because the math is obvious. And it must affect price at some point. It’s a “when, not if” situation. And those are the best kind of investment situations.
Have a great week,
Matt Badiali
