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The case of copper |  Forexlive

Copper is expected to end this month lower but continues to consolidate near the top of the long-term range. There are short-term headwinds with slowing China and global growth, but the long-term fundamentals around green tech are a huge tailwind.

I’ve written about “copper is the new oil” before and it’s compelling.

Today it gets a facelift with Goldman Sachs metals analyst Nick Snowden appearing on Odd Lots.

This line was particularly striking:

“Over the past two years, even though copper has doubled, no new copper mines have been approved.”

Due to inflationary construction costs and the continued lack of general interest in the sector, there is already talk of postponing projects that were likely to go ahead.

Another point that resonates is that any leader who has survived from 2008 to today in the mining sector is likely to be extremely conservative. Again, this means less supply in the market.

Ultimately, the kicker is that it takes 5-7 years to approve and build a new copper project. Thus, once the world is in a meltdown, it will not be easily rectified.

“There are practical bottlenecks, there are ESG bottlenecks, and there’s just conservatism around the money being spent. And, and on top of that, investors kind of get a great cash return story from the mining sector, you know, very, very high free cash flow return and they also don’t require growth from the sector either so you we are not we are the first innings in, in terms of, the supply response for, for, for copper. Certainly,” Snowden said.


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