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Copper prices could climb to $15,000 per ton by 2025, according to Goldman Sachs (NYSE: GS) analysts, who predicted this in a paper released last May. Copper’s recovery has been especially strong due to the increased urgency with which nations are shifting toward greener technologies and energy sources. While many commodities have recently enjoyed a price boost due to increased demand as national economies reopen, copper’s recovery has been especially strong due to the increased urgency with which nations are shifting toward greener technologies and energy sources. The metal that aided in the birth of civilisation over 10,000 years ago is now regarded to be crucial in assisting us in transitioning to a more sustainable future. Here’s why analysts are so bullish on copper because of the clean energy sector.
Copper as a New Source of Clean Energy
Copper was dubbed the “new oil” by Goldman Sachs in the same study, a bold claim that was not without merit. Most electronics currently use this highly conductive, naturally corrosion-resistant metal as a primary component.
However, as economies around the world drive increasing demand for electric vehicles, so will the demand for the vast quantities of copper required to make them. While today’s gas-guzzling vehicles require an average of 50 pounds of copper for wiring and electrical components, all-electric vehicles only require about 176 pounds. That is solely for the automobile. Even more copper will be required for charging stations and other infrastructure to power these electric automobiles.
Similarly, most clean tech systems, such as solar, hydro, and wind farms, require up to 12 times the amount of copper required in non-renewable energy systems.
The Imminent Supply/Demand Shortage
At the same time as demand for copper is increasing dramatically, global mine output of the clean energy metal is decreasing. COVID-19-related production halts and lockdowns resulted in a 5% fall in copper mine production in the United States, with even more drastic drops in key copper suppliers like Peru and Chile.
Miners had been underinvesting in copper for years, even before the pandemic, as other commodities seemed more appealing in the near term. Years of underinvestment, along with decreased production in 2020, might result in a supply shortage in the coming years as mines rush to meet fast rising demand.
Copper Investment Opportunities Attract Investors
While investing in green technology is a popular and successful trend, those who want to do so without having to guess which technology will succeed the most are turning to commodities, particularly copper. Because over 75% of copper is already used in wiring, transmitters, and other electrical components, the 12 fold increase in demand throughout clean tech means that copper will almost certainly see a big price hike regardless of which specific technology takes off.
As a result, looking for mining businesses that have existing or future copper-producing mines is a terrific way to get in on the action. With its Madison Copper Gold Project in the heart of Montana’s copper belt, junior mining businesses like American Pacific Mining Corp. (OTCQB: USGDF) can show tremendous growth potential for investors eager to cash in on this quickly increasing sector.
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