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u/ goobint writes:
Both the supply and demand dynamics in the copper market are looking incredibly favorable.
From a 2022 Goldman Sachs report, "Copper is so integral to the green transition – a global effort underpinned by government support – that the supply requirements necessitate a spike in copper prices"
Demand will increase
- EVs, EV charging, electrical transmission, and renewables all use a lot of copper, and are set to grow for the foreseeable future.
- For example, an EV uses at least 2x more copper than a gas powered car.
- There also isn't a clear replacement for copper in these products, meaning the price can continue to rise without destroying demand.
- Aluminum is the most likely potential replacement, but not nearly as efficient (it would require a much higher volume of aluminum to do the same job).
- Supply is expected to fall well short of demand in the 2nd half of this decade.
- Ore grades are declining at many of the largest copper mines and there have been almost no major new discoveries in recent years.
- New copper mines can take 10 years to get up to full production, so they would not contribute to the supply equation until 2033.