This billionaire has BOLD views on copper for 2024 (and you’d be wise to listen)

Robert Friedland has made billions from mining. He founded Ivanhoe Mines* in 1993, now worth a whopping $18B.

The man truly knows copper. Even if you don’t agree with everything he says.

He has BOLD views on the metal.

Here’s what he sees ahead:

The physical market is very tight, and now in deficit. In fact, he’s calling a bottom.

He reckons it’s more likely to reach $9,500/t than $7,500 from current levels.

A Goldman Sachs report even calls for $9K this year.

But let’s not forget…

$9,000/t is not enough to stimulate the industry.

Incentive pricing is much higher.

While some put it at $11K, Friedland himself says $15K/t will likely do the trick to bring new mines online.

One caveat though:

This price, he says, should be ‘stable for a long period of time’.

Deal breaker, I’d say.

Why?

Copper mines need a LONG time to build.

It’s common for these giants to need 20 years (or more) to be developed.

Hence stability is a must to navigate such long timeframes.

He calls this the revenge of the old economy.

And goes even further calling it ‘a power keg ready to explode as soon as the Fed cuts in the second half.’

The world has invested in ‘sexy technologies’ but not enough in the raw materials that underpin them.

(Amen)

In addition, the narrative that China is slowing down is flawed, he says.

China, in fact, consumed MORE copper in 2023 than in any other year, evidence of strong demand.

While the real estate sector may remain subdued (Evergrande’s liquidation is likely just the tip of the iceberg) it represents at most 25% of the country’s economy.

He views strong pull both from energy transition and military use.

But also coming from India, Europe, etc.

For a bit of perspective, most banks see a deficit in 2024.

ICSG had forecasted a large surplus** but things have changed a lot.

A few days ago they reported ‘an apparent deficit for 2023 of 130,000t. We’ll see what they say in their next meeting in April.

That’s it for today!

We know that commodity prices will do what they do, but eventually, the reality will catch up. Big copper mines are needed and the pipeline is not looking healthy, at all which can’t change unless price picks up.

PS: Sources and notes ahead.

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* Ivanhoe Capital was founded in 1987. In 1993, Friedland launched the precursor to African Minerals (forerunner of the current Ivanhoe Mines) to pursue mineral interests in Africa. It became Ivanhoe Mines $IVN in 2013.

**I wrote about the shift concerning copper demand in December

Sources:

• @robert_ivanhoe + Ivanhoe
• 📺 Bloomberg
• 📰 Bloomberg
• 📰 Mining.com