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600% by 2030: The next big investment boom

·4-min read
Rio Tinto copper mine and a plumber laying down copper pipes in a building.
Some analysts predict the price of copper could surge 600% by 2030 (Soure: Getty)

The price of copper is booming. Since the 1st of June last year, the price has risen over 93 per cent and analysts are saying this trend is likely to continue.

It’s price is often a predictor of what lies ahead in the economy, and that is why it has the name “Dr Copper”.

In fact a report from Carbonomics said that at the rate we’re going, copper demand could grow by 600 per cent by 2030.

So, why is copper growing at such an intense rate? Here’s an overview.

Why is copper booming?

It all comes down to basic supply and demand. Essentially, the world needs a lot of copper and as we stand right now there isn't enough.

With COVID hitting economies around the world many Governments, including Australia, have been investing hugely in infrastructure projects to create jobs, and copper is used for electrical wiring and water pipes.

This means that the more construction is going on, the more copper is needed to build.

And China, the world’s largest copper importer by far, has also been increasing its purchasing of the red metal. In March China increased its copper imports by 25 per cent from last year.

  • Also watch: The BHP CEO talks about growing demand in China

Additionally, and this is the major one, without copper, we cannot create clean energy technologies.

Solar panels, wind farms, you name it - it needs copper and as the world looks to move towards a more sustainable future we are going to need copper to get there.

In fact, the International Energy Agency (IEA) has been pushing companies and governments to increase their supply of copper so we can adopt green energy sooner rather than later.

“Today, the data shows a looming mismatch between the world’s strengthened climate ambitions and the availability of critical minerals that are essential to realising those ambitions,” executive director of the IEA Fatih Birol said.

“Governments must give clear signals about how they plan to turn their climate pledges into action. By acting now and acting together, they can significantly reduce the risks of price volatility and supply disruptions.”

So, how come we don’t have enough copper? Well, as with many things COVID played a role in creating supply chain disruptions with mining operations having to close production to abide by lockdowns and travel being restricted.

But, there has also been a real lack of new copper discoveries in the past ten years. According to S&P the large copper mining companies have been too focused on getting the best quality copper instead of getting production started on some of the lower grade copper.

S&P said copper discovery has been “dismal” in the past decade.

Since 1990 only 224 copper deposits have been discovered and of those 224, only 16 have been discovered in the last 10 years.

“We have been tracking the lower trend of new major discoveries for some time, and conditions have been worsening rather than improving,” the S&P report said.

How to invest in copper

To invest directly in the copper mining companies you’d be looking at investing in stocks and luckily the top two largest copper miners are Aussie.

According to The Motley Fool, here are the top ten copper miners by size:

  1. BHP

  2. Rio Tinto

  3. Vale

  4. Glencore

  5. Barrick Gold

  6. Newmont Goldcorp

  7. Anglo American

  8. Southern Copper

  9. Freeport-McMoRan

  10. Teck Resources

But, if you’re looking for a more broad copper investment, the easiest way to go is through Exchange Traded Funds (ETF), most of which are broad-based mining ETFs.

How to invest in a copper ETF

Interestingly, despite Australia being the second largest producer of copper in the world (only behind Chile), there isn’t a single copper-focused ETF on the ASX.

The best exposure you’ll be able to find on the ASX comes from broad resources ETFs. For example, BetaShares resourced ETF only has a 1.9 per cent allocation to copper.

So, if you’re looking for a greater piece of the pie we have to look to other markets - primarily in the US.

The three major copper ETFs listed on the New York Stock Exchange (NYSE) where you can get a broad exposure are:

  • The United States Copper Index Fund (NYSE: CPER)

  • iPath Series B Bloomberg Copper Subindex Total Return ETN (NYSE: JJC)

  • Global X Copper Miners ETF (NYSE: COPX)

You can gain access to these ETFs through an online share trading platform, like CMC Markets, Superhero, CommSec etc.

It’s best to shop around and make sure that the online trading platform you choose will give you access to the ETFs you’re interested in.

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