20. April 2021 | 07:00 CET
BMW, Nevada Copper, Geely - The supercycle is unstoppable!
Since January of last year, the copper price has more than doubled and is currently trading at a 9-year high. The trend is clearly towards further rising prices. Due to the switch to alternative energy such as wind power or solar energy and the displacement of the combustion engine by the electric car, a multiple of the carrier metal is needed. Experts from major American banks such as Citigroup or JP Morgan are already talking about a new "supercycle" on the commodities market, a sustained upward price trend. Demand is rising and supply is falling. Back the winners of the energy turnaround!
time to read: 3 minutes by Stefan Feulner
"[...] We knew the world was rapidly electrifying and urbanising and needing significant amounts of copper to do so. [...]" Nick Mather, CEO, SolGold PLC
Demand greater than supply
The green revolution is fueling copper demand. Experts predict that more copper will be mined in the next 25 years than in all of human history to date. An electric car requires four times more copper than a car with an internal combustion engine. The production of a wind turbine consumes 30 tons of copper per turbine, including connection to the power grid. In Germany alone, 420 plants were installed last year, and the trend is rising. In addition to the excess demand, there is another problem. Copper projects are few and far between, and the development of new projects has been severely neglected in recent years. Only insecure regions such as Mongolia or Indonesia have increased copper production.
A strong player from North America
With the trade war between the US and China likely to further disrupt global supply chains, domestic producers are more in demand than ever. So, Joe Biden will be pleased to hear, Canadian copper producer Nevada Copper is in the right place at the right time. They own one of the few production-ready new sources of copper in North America. The Company, which has been active since 2007, is searching for metals not far from the headquarters of Tesla and Google in the US state of Nevada in its own Pumpkin Hollow copper project. Pumpkin Hollow has significant reserves and resources, including copper, gold and silver. Among the major shareholders are well-known addresses such as Pala Investments and BlackRock.
Significant Exploration Potential
The Company's two fully-permitted projects include the high-grade underground mine and processing plant, which are now in production, and a sizeable open-pit project where progress has been made toward feasibility. In addition, several targets on the property have already been defined. The Company, which has faced delivery stoppages and delays on many occasions in the past, announced a breakthrough last month. The production shaft of the main shaft of the Pumpkin Hollow mine in Nevada has been put into operation. It can now bring up to 5,000 tons of copper ore per day to the surface. The turnaround, which was initiated with the new management last year, is now nearing completion. With the copper price rising, Nevada Copper is likely to be one of the beneficiaries of the supercycle.
In 2010, the Chinese Geely Group took over Swedish premium manufacturer Volvo. Since the Geely takeover, the Swedish carmaker's global sales have nearly doubled. In 2019, Volvo achieved its sixth consecutive sales record with over 700,000 sales. Geely is also Daimler's largest single shareholder, with around 10%. The Chinese are now using this built-up network to enter the electric car market with their ninth brand, Zeekr. With the Zeekr 001, which is said to have a range of 700 km, the Company says it wants to show that the days of "boring electric cars are over." Recently unveiled at the Company's new factory in Hangzhou and now at the Shanghai auto show, the vehicle is also said to be "the world's first electrically powered shooting brake." The 001 was designed at the Company's Swedish design center in Gothenburg.
Zeekr also plans to build a total of 2,200 charging stations with over 20,000 charging options by the end of 2023, with further expansion planned over time. Payment will be made digitally via vehicle registration and recognition. Deliveries are to begin in the fourth quarter, initially in the home market of China. The Company is aiming for global expansion in 2022.
BMW with an announcement
Also underway is the battle for the best batteries. Bavarian automaker BMW has now announced that it will continue to push the development of solid-state batteries. The aim is to develop a solid-state battery for series production by the end of the decade. Solid-state batteries are regarded as an important future technology in vehicle construction. A liquid carrier material no longer transports the charge. The Munich-based share price is currently stuck at a broad resistance zone at EUR 70. Due to the rapid doubling of the share price in recent weeks, the signs point to consolidation. A setback to the level of EUR 55 would be an interesting entry level.