Look beyond the Price of Copper

I didn’t think it could be done…

But BHP has found a way!

The big miner has managed to combine the two biggest investing trends of 2023. With the help of Microsoft, they’re now using AI to boost their mining output.

That’s right, AI and commodities have finally collided into a megatrend.

At least, that’s what I’m sure BHP was hoping to do. In reality, they’ve just released a bare-bones announcement of a collaboration with Microsoft for their copper mine.

AI’s disruptive potential may one day reach mining, but it ain’t there yet.

As BHP’s CTO even conceded in the press release:

‘We expect the next big wave in mining to come from the advanced use of digital technologies.’

Instead, the real story in this buzzword-filled update was copper.

Because as BHP themselves are forecasting, we need more copper.

A lot more.

In fact, over the next 30 years, we need to double production. And even that is a low-ball estimate, according to others.

AI may eventually be able to support this shortage in some way, but it certainly can’t solve it. What we need, really need, is simply more mines.

A new copper destination

The reality is that investment in copper production is woefully unprepared.

Headlines like this, for example…

…are simply far too rare to make a difference.

Worse still, even with Glencore throwing money at Peruvian copper, the locals aren’t liking it. General unrest and protesting of the mine have stalled output since late 2022.

So, even if the money does inject some much-needed productivity into the project, it will only be making up for already lost output. This is just one of the many factors leading to Peru being overtaken by a new copper mining destination…

Because you see, by around 2026 or 2027, Peru will lose its number-two spot.

The Democratic Republic of the Congo (DRC) will instead claim that position, second only to Chile in terms of copper output.

Could this make Africa a potential solution to our copper problem?

Maybe.

But I wouldn’t count on it.

What it will do, though, is offer up some incredible investment opportunities.

The tricky part in this equation is building sustainable and safe projects in Africa. Considering the rich amount of minerals that lie within the huge continent, however, it will likely be worth it.

It’s simply a matter of when the rest of the world begins to grasp that fact.

Going off the current expectation for the DRC to overtake Peru, that may not be long…

Too little, too late

Of course, if you’re only looking at the price of copper, you may think we’re mad.

A quick look at the chart will tell you a very different story to mine:

The value of this vital base metal has been falling pretty consistently of late, a symptom that would suggest demand is the real issue, not supply.

In the short term, that is certainly true.

China’s stalling economy, in particular, is weighing heavily on a range of commodities.

Not to mention ongoing worries about global growth as a whole.

My point is, the price of copper is reflective of current events. Traders aren’t taking into account the bigger picture. Or at the very least, not the entirety of it.

Our commodities expert, James Cooper, is bucking the trend in this regard.

Not only does he see a copper shortage brewing, but he believes NOW is the time to invest. You have a perfect window of opportunity to build a position before realisation dawns on the mainstream.

Check out what James has to say by clicking here.

Regards,

Ryan Clarkson-Ledward,
Editor, Money Morning