Copper is set to finish this month lower but is still consolidating near the top of the long-term range. There are some near-term headwinds with China and global growth slowing but the long-term fundamentals around green technology are an enormous tailwind.
I've written about the 'copper is the new oil' theme before and it's compelling.
Today it's getting a fresh airing with Goldman Sachs metals analyst Nick Snowden appearing on Odd Lots.
This line was particularly striking:
"Over the last two years, even though the copper has doubled, there hasn't been a single new copper mine approved."
Because of inflationary construction costs and the continued lack of broad interest in the sector, there's already talk of deferring projects that were likely to go ahead.
Another point that resonates is that any executive that survived from 2008 through to now in the mining sector is likely to be extremely conservative. Again, that means less supply coming to market.
Ultimately, the kicker is that it takes 5-7 years to approve and build and greenfield copper project. So once the world is in a shoftfall, it won't be easily rectified.
"There's practical bottlenecks, there's ESG bottlenecks, and there's just conservatism around spending money. And, and on top of that, investors are, are kinda getting a great cash return story from, from the mining sector, you know, very, very high free cash flow yield. And they're not demanding growth from, from the sector either. So you, we're not, we're we're first innings in, in terms of the, the supply response for, for, for copper. Certainly," Snowden said.