AIS - General Discussion, page-3

@NoLeafClover your last comment and the accompanying supply/demand scenarios got me thinking.

While there is no doubt that if the likely supply and demand scenarios for copper do play out, investors will probably do quite well, to put it conservatively. But I do wonder if in the long run it is actually in anyone’s long-term interest for the scenarios to play out as anticipated.

Since the many supply and demand outlooks for copper over the next decade are predicated on a surge in demand for copper on the back of wholesale electrification of national economies coupled with a range of supply constraints, doesn’t the question then arise as to whether the necessary electrification is even possible in the face of chronic under-supply and never-before-seen copper prices? Would we not all be better served if supply and demand were to be roughly in balance on the back of increased supply; making electrification possible and making money for miners and their investors, presumably off increased volume?

I’m not a commodities expert, nor am I particularly well-schooled in commodity economics, and I understand that a higher copper price is necessary to stimulate investment in exploration, mine expansion, new development and make lower ore grades viable etc. etc. but the question arises; at what copper price does economy-wide electrification and a whole range of long-established industrial uses become unviable.

For example, at what copper price does the production cost of an EV rise so high as to make an EV more or less a luxury item rather than what should be an affordable, mass market vehicle? At what copper price does the grid renewal necessary for wiring up renewables projects to industrial and household electricity consumers become unviable? At what copper price does copper household plumbing become an extravagance few can afford? In a nutshell, it’s a price elasticity of demand question; at what price does demand for copper collapse?

My intention isn’t to open a whole climate change and electrification is or isn’t a crock discussion, but rather to seek some views perhaps better versed in copper economics than I am on what appears to me at least to be a bit of long-run dilemma.