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Copper Fizzing At The Bungs As Supply-Demand Outlook Tightens

Rising price of the red metal puts spotlight on Avalon. Plus, Oklo shares get a wriggle on as first assays dribble in from its Mali gold project.

There is nothing quite like a spike in the copper price to lift the mood in the mining space. And with the red metal’s price putting on 10 per cent in the past month to its highest level since May 2015, its impact on the market mood has been plain to see, with big share price gains being notched up by the producers.

Copper’s feel good capability goes to its bellwether status on the health of the global economy. If demand/pricing for the key industrial metal is on the improve, so too is the global economy.

Copper’s rise in the past month from $US2.60 to $US2.85 a pound can be pinned to evidence of an emerging cohesive economic recovery in the world’s major economies and in recent days, thoughts that China’s environmental crackdown on “dirty” scrap supplies will add to demand for refined metal.

That’s all very good but the reality is that copper – its current price is a full US65c a pound above its average for 2016 – has been fizzing at the bungs for a major upwards price move – it got to $US4.60 a pound in 2011 – since early this year.

Ivanhoe’s Robert Friedland has long been a copper bull and he has stepped up the rhetoric in recent times in response to the explosion in demand coming from the electrification of the world’s most populous nations of China and India, all at a time when the electric vehicle revolution is taking hold.

His assessment of where copper is headed is a personal favourite. “You’re going to need a telescope to see the copper price in 2021,” Friedland told a Hong Kong conference back in April this year. A bit of hyperbole perhaps. But then there was this week’s copper comments from Freeport- McMoRan, owner of the mighty Grasberg copper/gold mine in Indonesia.

Freeport boss Richard Adkerson told investors on an earnings call that $US4 a pound copper was on the cards.

“You’re going to see a period of time where there’s going to be a shortage of copper, and you’re not going to see the price (just) go to $US3,” he told investors.

“We just need to look over our shoulders and we can see at times we had copper at $US4, and we’re heading for a world of where that is, I believe, on the cards.”

Plus Oklo serves up some African joy. Read more +

View More Articles By Barry Fitzgerald

One of Australia's leading business journalists, Barry FitzGerald, has joined the Resources Rising Stars' Ten Bagger team. FitzGerald, who is a specialist resources reporter with 40 years' experience, will publish his highly regarded weekly column in Ten Bagger.

FitzGerald - whose column highlights the issues, opportunities and challenges for small and mid-cap resources stocks - most recently penned his column for The Australian newspaper and before that, The Age. His column will give readers the chance to benefit from FitzGerald's extensive contact base, invaluable insights and vast experience of the junior and mid-tier resource sector.



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