Steve Yuzpe, president and CEO of Sprott Resource Holdings, says strong supply and demand fundamentals will support copper prices moving forward.
“It really boils down to both the supply and the demand side. On the demand side of the equation, I think people see it in their daily lives. The emergence of electric vehicles, they use significantly more copper than internal combustion engines, we’re seeing electric buses sprouting up,” he told the Investing News Network (INN) at the International Mining Investment Conference.
“On the supply side, there has been significant underinvestment, which has meant there haven’t been new discoveries made, and we need those new discoveries now in order to bring new supply in down the road,” he continued. “So we have both long-term supply and demand support for the the metal.”
Speaking further on how the rise of electric vehicles will inevitably support copper’s upward march, Yuzpe explained, “we still need to see a lot of electric vehicles sold before it really has a noticeable impact on demand, but it’s coming.”
He also touched on where he sees copper prices heading, noting, “we do expect copper prices to remain strong … and really it goes back to that underpinning of long-term supply and demand fundamentals.”
Watch the video above for more insight from Yuzpe on copper. You can also read the transcript below.
INN: We’re here at day one of the International Mining Investment Conference in Vancouver. How are you finding the event so far?
SY: It’s been great so far. Really good presentations, great companies presenting.
INN: Today you gave a presentation about copper and the future for the metal. Can you tell our audience why you’re bullish on copper?
SY: It really boils down to both the supply and the demand side. On the demand side of the equation, I think people see it in their daily lives. The emergence of electric vehicles, they use significantly more copper than internal combustion engines, we’re seeing electric buses sprouting up. In fact, China is purchasing and deploying 9,500 electric buses per five-week period — that’s the equivalent of London’s entire working fleet every five weeks. Renewable energy projects use a significant amount of copper within their guts; a wind turbine, for example, uses 3.6 tonnes of copper per megawatt. So on the demand side, we’re really seeing demand growth beyond the historical growth in copper demand.
On the supply side, there’s been significant underinvestment, which has meant there haven’t been new discoveries made. And we need those new discoveries now in order to bring new supply in down the road. The grades of the existing copper mines producing copper today have been declining. So we have both long-term supply and demand support for the metal.
INN: Let’s talk about supply first. We know the current mines are aging, grades are lower — where will new supply come from? Where, geographically, will we find the new supply?
SY: Well, I think there are a number of regions in the world that are endowed with great copper resources. Our favorite happens to be Chile. Chile has the largest concentration of world-class copper porphyries in the world. It is the number-one country for global copper production, and it’s number one for global copper reserves as well. About 29 percent of the world’s copper reserves are in Chile. So there’s a lot of copper in Chile.
INN: In terms of demand, you talked a little bit about the electric car sector. Will the market see the impact right away? Is that yet to come? What are your thoughts on that?
SY: It’s yet to come. Every electric vehicle uses three times as much copper as an internal combustion engine vehicle. That’s about 165 pounds of copper. But we still need to see a lot of electric vehicles sold before it really has a noticeable impact on demand, but it’s coming. The expectations for electric vehicle adoption are very high. The other part of the equation, though, is that the charging stations and the infrastructure required for electric vehicles also use a lot of copper.
INN: We’ve seen copper prices go up. Will copper outperform gold this year? Are you expecting that?
SY: Well, I’m at Sprott, so I can never say anything negative about gold or silver. We do expect copper prices to remain strong, though. And really, it goes back to that underpinning of long-term supply and demand fundamentals.
INN: You mentioned gold and silver, but are you interested in any other commodities this year? Are those the ones that you’re interested about?
SY: Definitely. So number one on our list at Sprott Resource Holdings is copper. But just after that, we are bullish on gold and silver, we like nickel, we like zinc. There are a number of the metals that are used today in the new economy and the green economy that we still think will make fabulous investments.
INN: My last question for you today: what would be your best piece of advice for someone new to the sector?
SY: If you’re new to mining, I would say do your research, study the company, understand what you’re buying and know why you’re buying it. So if the circumstances ever change, for better or worse, you can revisit your investment decision.
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Securities Disclosure: I, Nicole Rashotte, 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.