Interview: Will Copper Prices Fall Below $2 per Pound?
November 23, 2015 | Copper prices have been having a tough year, and the red metal has fallen sharply this month in particular. Stefan Ioannou of Haywood Securities talks copper prices and what’s in store for the market. … Read MoreGet Copper Stock Investor Kits
November 19, 2015 | Despite the rout in copper prices, a number of TSXV-listed juniors have managed to record share price gains in 2015. … Read MoreGet Copper Stock Investor Kits
Type “copper thieves” into your favourite search engine and hundreds of articles will come up showing the lengths to which people will go to collect a few pounds of copper. Or, in the case of a hijacking in Montreal, thousands of pounds of copper.
Between 2003 and 2008, copper prices rose from less than $1 a pound to more than $4 per pound. As a result, people the world over, honest or not, are looking for copper. The price has started coming back down so it will be interesting to see if the theft starts declining as well. For more information on the price of copper, click here.
The melting and use of copper goes back more than 10,000 years and has been found in early civilizations all over the world. Adding tin to copper to make bronze made the metal easier to cast. Bronze was used in all aspects of life. Today, copper is used for wiring, plumbing, coinage, electronics, and a variety of other applications. Given increased development in countries such as China, India, Brazil, and Russia, the use of copper is on the rise. China is using more and more copper, and its contribution to world copper demand has risen from 22 percent to 40 percent since 2008. With increased copper use in cell phones (and cell phone towers), computers, cars (think hybrids!), smart homes, pipelines, and supertankers, the increase in demand isn’t likely to let up.
And recycling copper pipes is not enough to meet the new demand. Annual global copper production exceeds 33 billion pounds, or more than 15 million metric tonnes. The identification of new reserves needs to happen at a significant pace in order to maintain those production levels.Certainly, despite a current state of oversupply in the copper space, a number of analysts and market watchers are calling for a copper supply crunch in coming years.
In order to bring new production online, junior exploration companies are scouring the world to find new copper deposits. Chile is the largest producer of copper and contains a massive 38 percent of known copper reserves. However, many other countries also have significant known reserves including the United States, Peru, Australia, Mexico, and Canada. The USGS also estimates that northeast Asia (Far East Russia and northern China) could hold 260 million metric tons of undiscovered copper reserves.
The returns can be significant. Peru Copper listed on the Toronto Stock Exchange in the fourth quarter of 2004. At that time, the company was worth about $150 million. In June 2007, the company announced a friendly buyout by Aluminum Corporation of China that valued the company at more than $900 million. This represents a 500 percent increase in less than three years.
In December 2005, Northern Peru Copper Corp issued more than 2 million shares at $1.50 per share in a private placement. All outstanding shares of the company were recently bought by China Minmetals Non-ferrous Metals Co., Ltd and Jiangxi Copper Co., Ltd. for $13.75 per share. That’s an amazing return of more than 800 percent in two years.
Consider also the success of Canadian mining legend Ross Beaty with his Lumina Copper group of companies, who has reportedly brought over $1.4 billion back to investors through the sale of those copper companies and assets with only $170 million invested.
The hunt is on for the next copper deposit and the next copper company that will bring huge returns to investors.