VIDEO - Copper, Where Art Thou? Gianni Kovacevic Talks Demand

Base Metals Investing
Copper Investing

Copperbank Resources’ executive chairman talks copper at this year’s International Mining Investment Conference in Vancouver.

Copper is the metal of interconnectivity, and with the rise of technology more copper is going to be needed in the years ahead, says Copperbank Resources (CSE:CBK) Executive Chairman Gianni Kovacevic.

Speaking ahead of his seminar on the “re-electrification of everything” at last week’s International Mining Investment Conference in Vancouver, Kovacevic said that we need to be asking how we’ll source enough copper for a booming tech sector in the next few years, if not decades.

He said that global copper supply is coming to the edge of a three-year void, with no new large projects coming online — just as more technologies that require copper are coming onto the market.

Kovacevic said that major energy supplier Shell (NYSE:RDS.A) is considering the future of the “energy mix,” and that “eventually we [will] get to the point where we have to re-electrify everything” because of the hyper-adoption of modern technology.

“Where is [the copper] all going to come from?” said Kovacevic.

The next big projects to come online will be the Rio Tinto (ASX:RIO,LSE:RIO,NYSE:RIO)/Ivanhoe Mines (TSX:IVN) Oyu Tolgoi mine in Mongolia, and Ivanhoe Mines’ ongoing projects in the Democratic Republic of Congo — projects that could take until 2022 before they become fully operational.

Kovacevic also shared his thoughts on Lundin Mining (TSX:LUN) and Euro Sun Mining (TSX:ESM) and their attempt to acquire Nevsun Resources’ (TSX:NSU) copper projects in Serbia and Eritrea. He said that industrialist and Tesla (NASDAQ:TSLA) chairman Elon Musk is “logical” in seeking to reduce his company’s reliance on cobalt for batteries.

Watch the video above for more from Kovacevic on copper and its future. You can also read the full transcript below.

INN: So, it’s day one bright and early of the conference. What are you looking forward to?

GK: Well, I always test the temperature of the crowd, of the audience – one of the ways you do that is by having a title of a talk and see well who’s attending. How many people are at the conference but who’s at my talk? The title of my keynote which will be later this afternoon is the “re-electrification of everything.” About three weeks ago Shell Corporation came out with another of their scenarios which they talk about the how shall I say, hyper adoption of modern technology innovation things that are going to impact the incumbent energy mix. They basically said that today 20 percent of the world’s energy mix is electricity, 80 percent is conventional fossil fuels and a basket of different things. Eventually, we get to the point where we have to re-electrify everything. Just think of how much copper and aluminum has been applied to this part of the energy mix, and if we’re going to do that whether this happens in 40, 50 or 60 years – It took 120 for the first component to happen. Where’s it all going to come from? It’s an interesting quagmire and I don’t think people really bring the word copper into the discussion, it’s just assumed that it will be there.

INN: Fascinating, and speaking of copper so it was big news last week. Do you have any thoughts on London mining and Euro Sun’s attempts to purchase Nevsun and their copper assets in Europe and Africa?

GK: Yeah, that’s an interesting deal. I think Serbia is a place that would be one of the big growth markets within. They have an established copper mining culture there, I mean since the Tito years. In fact, it goes back may back into almost historic times, that’s going to be a 40 or 50-year mining complex. Freeport is involved as everyone knows. They had that relationship with Tenkay in Congo which they collectively sold for a pretty big, pretty good number to the Chinese. That would be a good acquisition I think. I think that partnership would go – would work well and I guess the whole industry is been waiting what will Lundin mining do with all its cash. And well, they executed on this. They’re trying to get over the line so we’ll see what takes place there but I think long-term that’s very positive for Lundin mining.

INN: Okay. So, what do you think of Nevsun’s decision to eject, what are your thoughts on that?

GK: Let’s see what their shareholders say. Usually, shareholders own the company. So do the shareholders want Lundin mining shares, someone else’s shares or do they want to stay with Nevsun shares, we’ll see.

INN: Okay. So, in your opinion what do you think’s been the biggest news in copper so far this year in 2018?

GK: I was in Lisbon on April 26th where the International Copper Study Group based in Lisbon, they met I did the keynote for them talking about energy and coppers role in the future of energy, and they came out with their forecasts as most people that follow the ICSG know, they only forecast one year in advance. So, they came up with the supply and demand estimation or prognostication. We have been in deficit the last four or five years. They’ve always had to re-calibrate at the end of the year.

We have finally reached the point where once we enter 2019 there is a three-year void with no new production coming online that’s greater than a hundred thousand tonnes of metal yield per year. This is almost– I won’t say unprecedented but this is very unique. And this is happening at the same time. We’re finally this whole copper in the energy mix for the demand side where the growth rate for copper, in my opinion, will be something like four or five percent dovetailing into this void vacuum. Think of the gravity of that 2019, 2020, 2021 nothing. The next one will be the expansion of Oyu Tolgoi which should come on around 2022 and then you can argue Kamoa, Robert Friedland’s Kamoa comes online in that year, that’s what they’re aiming for. But that’s going to be interesting. It’s going to surprise the market in my opinion.

INN: Okay, and you said that PDAC in March that you are interested in all electric metals. So, what do you make of Elon Musk saying recently that Tesla is trying to reduce the amount of cobalt used in their batteries?

GK: I think it’s a logical statement. If cobalt is that rare geologically and of course we all know the constraints with Congo and what-have-you it would make sense, it’s not just Elon Musk. There are tens of thousands, maybe hundreds of thousands of people working in the battery space. These are chemists, these are technologists, these are innovators. It’s plausible that there are going to be new chemistry’s which is going to disrupt the current mix be it lithium, cobalt, manganese, vanadium, whatever it might be. He has a team of very smart people, dedicated people working on this. They’ve already achieved some reduction in cobalt. Could this continue? Yeah. Why won’t it? The mainstay, the salad bowl, if you will, is copper. That’s not going to change. If you look at the film they’ve looked at using on the anode I’m speaking about they get it thinner and thinner, gets to a point were it rips and also the all, the entire interconnectivity. Well, what’s lithium’s role in the lithium-ion battery? Well, I mean it’s there but there’s a lot of lithium in the world too. So, there’s a great opportunity but we’ve seen now where some of these things are coming home to roost. And the analysts and investors are saying, “Hold on a second”. A lot of investments went here, a lot of people are working on the other side of the chemistry. They may not dovetail together because all of a sudden, oops, we changed it and now we need less of this but more of that, to be continued however we’ve seen that a reduction and this may continue.

INN: Okay, great.

GK: I’ve got one more thing to add to my people that are following me and my story Copperbank. We hired a new CEO for Copperbank. It’s not really hiring, it’s more of a partnership. Giulio Bonifacio is now my- with a CEO of Copperbank he’s my partner, wrote a big check into the company fully aligned. We are now looking to accelerate the business model with the copper prices sort of revitalized, there being three dollars a pound. We believe climbing higher and I think I encourage people to follow the Copperbank story, look at some of the things that we’re working hard to achieve and they should meet Julia and myself at a conference near you.

Don’t forget to follow us @INN_Resource for real-time updates!

Securities Disclosure: I, Scott Tibballs, hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in contributed article. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.

The Conversation (0)