Portfolio, page-133

"I notice you are back in the fold. It’s good to hear from you."

Was occupied with a third-party project during October, the nature of which would have made it inappropriate to be posting about individual companies.


"I remember you referencing some months ago about the potential incoming Copper shortage. Since this time I have heard a number of fund managers making similar suggestions ie. they like the long term outlook for the commodity.
I was wondering how you were going with your search for a copper play that best leverages this thematic."

My bullish thesis for copper has only been reinforced in recent months.

The global Copper market is today where Coal and Oil & Gas were 18 months ago. For different reasons, the supply-demand discontinuities are remarkably similar.

The difference is that in the case of Coal and Oil& Gas it has been a supply-side shock that has caused the structural equilibrium price to rise; in the case of Copper there is a double whammy of supply- and demand-side shocks that are playing out.

In Coal and Oil & Gas it was a combination of static supply coinciding with moderate growth in demand; for copper it is static supply combined with rapid acceleration in demand growth.


Trouble is that's the easy bit; the hard bit is how to execute on that thesis.

And that's where I've become stuck: I can't find a decent enough vehicle to play it (the only one that I thought was half decent, and which would let me sleep easy at night, is the one where BHP beat me to it).

The rest of them all have too may warts for me; either:

- under-funded,
- un-competitive cost structures,
- limited asset lives,
- opaque capital management strategies,
- sovereign risk issues

So I'm afraid I'm not going to be able to add any value in terms of identifying a quality copper play (well, not in the Australian context, any way), so I may have to start looking internationally.

Or perhaps see if the commodity market makers at CommSec or Macquarie Bank will price me some Dec 2025 copper calls.

Frustrating when you develop and idea, but can't execute on it.

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