This is a very good presentation -(see link below) see from slide 15 with a focus on gold and copper from slide 20. There are some excellent charts to ponder.Key points are:- mining cap exp is very low even lower in real terms than in 2003 just before commodity prices took off.- free cash flow of miners is 3 times the boom time between 2000 and 2012- metal stockpiles are very very low and keep falling. Thee is a quote on slide 18 “There is a serious problem at the moment in terms of metal availability. There is a view that you can just flick a switch and produce more. You can’t. This requires long term planning. Trafigura CEO Jeremy Weir 11th January 2023” (they are a large commodity trader).
- slide 22 shows the inflation since 2018 is a mirror image of the 1970s from 1972 to date
- slide 23 shows record central bank buying of gold since 2010 the reverse of the selling that went on from 1970 to 2010
- copper stockpiles having been falling strongly since 2018
- drought of major copper discoveries since 2015 continues.
If history repeats there will be large increase in commodity prices over the next 5 or more years - not just copper but Zinc, lead, aluminium, nickel, etc.
I read that Moly price went up 58% this week with some companies desperate to find supplies. The article commented that this might happen to other metals as there is a lack of new mine development, a harsh environment and zero availability of metals.(see quote below from the article).
What is also fascinating is that Rick Rule has been commenting in the last 6 months that he has never seen junior miners so cheap in his nearly 50 years of investing in mining companies.
Is the world going to face a perfect storm regarding metal prices?
https://wcsecure.weblink.com.au/pdf/LRT/02622819.pdf“An example of what’s happening in the tight market for most industrial metals can be found in molybdenum (or moly for short), a material used to harden steel, which exploded this week with a rise of US$27 a kilogram (58%) to a 15-year high of US$73.50/kg.
Argus, a commodity tracking service, said that some clients in Europe were so desperate for supplies that they flew a cargo of moly from China.
More importantly, because it goes to the theme of the world being short of some commodities thanks to a lack of new mine development and tough environment, social and governance (ESG) rules, a European moly trader told Argus that: “There is zero availability”.
What becomes really interesting for Australian mining companies is the question as to whether moly is an early example of the world running out of basic industrial metals as China stimulates its Covid-shocked economy and starts to hunt for supplies which don’t exist with other moly-like price explosions to come.”
(20min delay)