RE: Interesting ?well it was for me :-)4 Oct 2019 13:48
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https://www.ft.com/content/b71d2cde-da1a-3164-99c8-021f8d77a45b
Paul Gait and his team of metals mining analysts at Bernstein in London have come up with estimates of the copper price levels needed to finance new mines. “We believe copper needs to be priced at $8,800/tonne, or a 40 per cent uplift, to meet the government-agreed 2030 targets for decarbonisation.”
If you believe the current consensus targets are not adequate, Mr Gait and his team have a more ambitious “Greta Scenario” for complete decarbonisation by 2025. That would require no less than $20,000/tonne to produce the required copper.
Even keeping copper production close to today’s level will be a challenge. As Mr Gait says: “The industry faces an enormous decline rate [from existing, depleting reserves]. Mine supply has grown at 2.5 per cent and 3 per cent per annum forever. To accelerate beyond that for an industry the size of copper mining would be a hell of an undertaking.”
OK, what if we fail at decarbonisation, and we are forced to turn to adaptations? Such as Europeans buying home air conditioners (a big new growth market). Those will require a lot of copper for coils, wires, power generation, etc.
None of this is reflected in the (flat) forward curve for copper prices. On this course, decarbonisation will require not science and industry, but wizards or divine intervention.
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