The presentation discusses the short to medium term outlook for Copper. Key observations were:
- The World’s economy is recovering from the Global Financial Crisis – and has 12 months to go
- The Tohoku earthquake and resulting tsunami will not derail world demand for copper – however, the loss of power in Japan may affect local industries
- Copper prices are set to stay strong in 2011 and 2012
- A Major supply gap between supply and demand will open up post-2020. This will be filled with (unspecified) new copper projects
- The challenge is that the existing Major Producers need to replenish their pipeline of copper projects. The opportunities for acquiring giant deposits are fairly limited – as most of the undeveloped deposits are already tied up with other Majors.
- Developers will need to embrace and manage risk. 80% of the >5 Mt Cu undeveloped projects are in High Risk and Very High Risk Countries.
- M&A activity is picking up – especially for undeveloped projects
In summary, any Junior Company with a decent, or even a half-decent, copper project will be in a favoured position for the next few years.
Note: I did the presentation as a representative of the consulting firm CRU Strategies. I regularly assist them on specific assignments in downstream aspects of the mining industry.