Copper Outlook

Morning Guys,

I read this article on mining.com earlier today:



http://www.mining.com/web/rbs-stop-financing-new-coal-plants-oil-sands-arctic-oil-projects/


... and it led me to collate a few pieces of information/ stuff I'd seen/ read recently and figured I may as well do it here for others to look at too.

RBS is not the first major bank to shun high carbon projects. HSBC is also doing the same. This is a presentation slide from a recent Cambridge House conference:



So, not only are large banks curtailing fossil fuel project investments, If HSBC is any indication they are ramping up renewable energy project funding by an order of magnitude.

Thus, it is thus not surprising to see this growth in renewables:



In part, this is being driven by the fact that renewables are now cost competitive with other forms of energy generation:



and in part due to Governmental policy:



The importance to MOD is that renewable energy generation (and EVs) are much more copper intensive per unit of output than conventional energy generation:



This, according to McKinsey, is going to lead to a robust demand outlook for the metal:



whilst at the same time the production grades from the largest Cu projects are falling as old and tired mines start to deplete:



Because of the severe commodity bear market there is now a structural hole in the supply chain for large scale Cu mines to be brought into production in the near term:



Which, according to Rio Tinto, is going to cause a long lasting and, within a time horizon relevant to investors, semi-structural, deficit in the Cu market:



So whilst the market frets about Italy today (and likely something else tomorrow) the set up in the Cu market, and the prospects for a Company such as MOD are only getting stronger by the day.

Even if the world enters a recession in the near term, the move towards renewable energy generation and electric transportation is a process that will not reverse, in part due to climate change and air pollution and, in part as shown above, because it is starting to make economic sense.

MOD is very well positioned to benefit from this sector outlook.

Cheers
John