Asian industrial demand driving heavy investment in copper mining
Gold may have been the safe-haven investment option during the pandemic, but copper looks set to be the new metal for investors to watch in the coming years.
As a core component of everything from electronic goods and heating systems to construction, telecommunication and power infrastructure, copper is highly in demand as industrial economies ramp up production to make up for lost time.
With copper also playing a key role in the manufacture of renewable technologies, demand for brown metal is predicted to remain high for decades, prompting a new era of copper speculation and mining investment to maintain the supply.
Industrial demand for copper
Copper is an essential metal in construction and manufacturing, and the surge in copper demand is due in large part to the growth of industrial economies – particularly China and India, which are some of the largest consumers of copper globally.
With more nations in the Asia Pacific set to become major industrial economies in the near future, copper demand will grow even further. In the developed world, the commitment to renewable energy targets by the United States, China and many other nations will also require a steady supply of copper for batteries, wires and other electrical components.
These factors combined are expected to make the 2020s the fastest decade for volume growth in copper demand in history. A report from Goldman Sachs released earlier this year forecast that copper demand will grow by 600 to 900 per cent by 2030 (5.4m to 8.7m tonnes), leading to copper being termed "the new oil."
Resolving the supply shortfall
Copper production worldwide must increase significantly to meet this high demand or the global shortfall could reach as high as 10 million tons by 2030, according to estimates from commodities trader Trafigura Group.
To maintain the supply will require investing upwards of $100 billion in mining. In previous years, the high cost of establishing, operating and upgrading copper mines was a deterrent for many companies, but rising copper prices and the expectation of long-term profitability are turning this attitude around.
Copper mining activity has increased around the globe over the past few years, from established South American miners such as Chile and Peru to emerging Asia Pacific mining nations such as Indonesia and Vietnam. China is ramping up production to meet domestic demand and reduce its reliance on imports, while Australia is home to some of the world's largest copper deposits and promising new prospects.
Copper investment opportunities
With demand and prices for copper only expected to grow, the metal is considered a safe choice for investment in 2021 and likely across the decade. Copper's industrial use means that supply and demand are subject to less fluctuation than many other metals, and those investing in copper mining companies can share their success.
Locksley Resources Limited (ASX:LKY)
Barclay Pearce Capital's client Locksley Resources Limited (ASX:LKY) is an Australian exploration company. They are focused on identifying and assessing opportunities for the acquisition, exploration and development of copper and other mineral resources projects in Australia that have the potential to deliver significant growth for shareholders.
Locksley Resources was incorporated in October 2018 and has acquired 100% legal and beneficial interest in the highly prospective Tottenham Copper-Gold Project.
To keep up to date with Locksley Resources' news and progress, and for more information about copper investment as a whole, subscribe to the Locksley Resources Limited Chairman's List.