Copper soars on vaccination roll-out
High price environment came about due to long overdue action needed to maintain global economic growth
COPPER prices are at decade-high levels as speedy vaccination roll-outs and hefty economic stimulus packages lift hopes for an economic recovery and higher demand for metals.
Benchmark copper on the London Metal Exchange was down at $9 758.20 (R139 805) a ton in official trading after reaching $9 965 on Tuesday, the highest since 2011 as port workers in Chile called for a strike a day earlier.
The price of copper, which is used in electric equipment such as wiring, has more than doubled since March 2020 as the world economy rebounds and the shift to greener, more copper intensive energy raises the prospect of supply shortages.
Errol Smart, chief executive and managing director of Orion Minerals, which operates the Prieska Copper-Zinc Project in the Northern Cape, said higher prices would boost the junior company’s fortunes.
“At current metal prices the project will generate more than 60 percent of its revenue from copper sales,” Smart said, “so any boost in copper and base metal prices is good for us.”
Smart said the high copper price environment came about due to the frantic and long overdue action needed to maintain global economic growth without killing the world in a cloud of hydrocarbon pollution.
“The world has woken up too late and copper, the most important commodity for electrification is in short supply,” he said. “Decades of lead time
is needed to discover and build large copper mines.
“There simply is just not copper being mined to match booming global
demand and there have not even been enough deposits discovered to develop the mines that will be required.”
Smart said Orion had positioned
itself perfectly in the Northern Cape, which had some of the most prospective new era/base metal host geology in the world.
He said the Northern Cape’s prolific renewable energy generation potential, together with ability to produce new -era metals in a cleaner, greener manner presented an unparalleled opportunity for Orion.
The group secured the lion’s share of the best quality, advanced stage projects in the Northern Cape.
“Our timing could not have been better to harvest this commodity super-cycle,”said Smart.
Anchor Capital’s investment analyst, Seleho Tsatsi, said copper prices had been spurred by greater demand.
Tsatsi said there had been an expectation that the transition to a greener economy would increase demand for several metals, including copper, over time.
“This greater demand, combined with supply constraints, has spurred commodity prices higher,” Tsatsi said.
Copper’s robustness was aided by banks like Goldman Sachs that lifted its bets on the metal’s consumption this year.
According to Metal Bulletin, Goldman Sachs’s 12 month copper price target was $9 500 a ton next year, up from a $7 500 a ton projection previously, with a 2021 average price forecast of $8 625 a ton.
Chief market analyst at Markets. com, Neil Wilson said copper was at a 10-year high on a mix of surging demand and supply problems in Chile, while palladium was at a record.
“Massive infrastructure spending is a factor, so too a major rebound in demand and supply constraints,” Wilson said.