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Outlook for Copper prices is bright

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By Peter van der Borgh

Copper has been extracted and used for much of human history, with some believing that copper was the first metal to be ever mined and crafted by humans.

Besides, there is evidence the metal has been helping our civilisation advance for the past 11,000 years.

Copper tools crafted by humans at about 5000 BC have been credited with helping humankind transition out of the Stone Age and into the Bronze Age.

Historically, copper has often been regarded as a good gauge of economic activity, thanks to its numerous applications.

The “red metal” is highly conductive to heat and electricity and can be easily moulded and shaped, making it the ideal material for electrical equipment such as wiring and motors.

It is also widely used in various industries, including, among others, construction, manufacturing, and power generation.

As such, high copper prices usually reflect high demand meaning the global economy is vibrant and growing.

Throughout the global transition to modern technologies and a more circular economy, copper has been in high demand due to its use in renewable energy systems generating power from solar, hydro, thermal and wind energy, and its use in all types of batteries and electric vehicle components such as motors and charging equipment.

It can also be easily reused and recycled.

Over the past few years, with both consumers and industry becoming more conscious of their environmental footprints and countries setting goals to reduce their emissions by embracing greener energy, demand for the metal has been steadily rising.

According to a 2017 World Bank report, demand for copper could see a ten-fold rise by 2050, “as the world moves toward a low carbon energy future”.

Also, according to a research report issued in September 2020 by Bernstein, one of Wall Street’s premier research firms, global copper production would need to rise by between 3% and 6% per year by 2030 if countries are to meet the targets of the Paris Agreement, the international treaty on climate change.

China factor

Even though copper was impacted in the immediate aftermath of the Covid-19 outbreak, leading to a steep price drop in March 2020, copper prices continued making an impressive recovery on the back of higher demand from China, the world’s leading copper consumer.

China was one of the first countries to mitigate the impact of the virus and restart key industries.

Financial services firm Canaccord Genuity expects “copper prices to average $3.50/lb ($7716/mt) in 2021”, an approximate 17% increase on their previous forecast of $3.00/lb ($6,614/mt).

Confidence in the metal was boosted by the global roll-out of the vaccine, an anticipated rebound of the global economy, and industrial activity’s sustained growth.

Joe Biden’s election in the US could benefit demand for the red metal over the medium to long term since the administration’s green energy policies point to increased copper usage.

The outlook for copper is bright, with analysts predicting that with the return to normality in the electronics, manufacturing, auto and construction industries, the metal will be very much in demand this year.

However, some experts caution that increased volatility in the market will persist, as there is little certainty about what the year may bring.

Promising discoveries

Copper mining companies worldwide are optimistic about the prospects for 2021, with many anticipating better market conditions for the red metal and increased demand for their products.

Although Cyprus’ mineral deposits are limited compared to large-scale copper producers such as Chile or Peru, it has significant untapped mineral deposits.

It could benefit from the global surge in copper prices, leading to jobs, services, training, and state revenue opportunities.

Recent findings by Venus Minerals at one of its fields can boost the country’s prospects.

Based on our latest findings at our Magellan Project, there is an estimated combined resource inventory of 9.5 million tons at 0.65 per cent of copper with the additional value from gold, silver, and zinc.

The new findings increase confidence with regards to Cyprus’ copper deposits.

Τhis development comes amidst discussions in the public sphere on the need to diversify the country’s economy.

In Cyprus’ case, one thing is sure; Long before services and tourism became Cyprus’ main pillars of economic growth…there was copper.

The writer is Managing Director of Venus Minerals