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Commodity Investing

10 Copper Producers Set to Benefit From Coming Shortage

I was recently among friends at my hunting and fishing club. I posed this question to them: “What’s the most valuable metal in the world?”

The responses were gold and platinum. I told them they were all wrong.

Gold’s been around for only 5,000 years. I’m talking about a metal whose value was established more than 10,000 years ago.

Not one of them guessed the correct answer.

Today, this metal is used every day around the world. The global economy would grind to a halt without it.

Here’s the good news: The demand for this metal is about to hit the launch pad.

We’re expecting a shortage will be here in just a few years. So that’s going to send prices of a few mining stocks through the roof.

And today is the perfect time to invest in this wonder metal.

The Red Metal

In case you haven’t guessed it, I’m talking about copper.

Copper has wormed its way into nearly every sector you can think of. And the demand coming from renewable energy is about to disrupt the metals industry.

In 2018, wind energy in the U.S. grew 8%. Existing onshore wind generates annual revenues of more than $1 billion.

And now the U.S. wind industry is heading offshore. Not to another continent, but 20 to 30 miles off the east coast. There’s enough wind there to power the entire East Coast region – with plenty to spare.

Between now and 2028, wind farms will install more than 780 gigawatts of new turbines.

By 2040, the global wind industry could be 15 times larger than it is today. That could attract more than $1 trillion in investments.

Companies, cities and states are increasingly demanding clean, renewable power.

What does that mean for copper demand? Plenty.

Copper is the ideal metal to generate, transmit and distribute energy with. It’s highly conductible and has low resistivity.

Because of its malleability, copper can easily be turned into wire. It’s also used in solar panels and battery storage systems.

That’s why earlier this year, the International Copper Association commissioned a study to measure the effects the rise in renewable energy will have on copper demand. Take a look…

Chart - Copper Annual Capacity Forecast

By 2027 the demand for copper will increase 56%. That’s an additional 813,000 metric tons over today’s production levels.

Between now and 2028, an additional 5.5 million metric tons of copper are going to be needed. And that’s just for renewable energy.

Driving Demand Even Higher

In addition to renewable energy, electric vehicles are driving the demand for copper higher.

Copper is used everywhere in an EV. It also plays a big role in EV charging stations.

Today’s internal combustion engine vehicles use about 18 to 49 pounds of copper.

In contrast, today’s battery EVs consume roughly 183 pounds of copper – nearly 10 times that amount.

And that’s just for a car…

Battery-powered buses are becoming very popular in China. And they are now starting to show up in major U.S. cities.

Each e-bus gobbles up 814 pounds of the red metal. It all means a massive uptick in copper demand is imminent.

Copper demand for EVs and buses currently consumes about 370,000 metric tons. But by 2027, demand from EVs will send copper demand to 1.74 million metric tons annually.

Top 10 Producers

All this incremental demand for copper is going to create a supply shortage.

Today, copper sells for about $5,800 per metric ton on the open market. That number could hit $9,000 per ton or more as the shortage unfolds.

The important thing investors need to be aware of is the urgency of investing in the big copper producers (and a few select small ones).

These were the top 10 copper producers in 2018…

Chart - World's Largest Copper Producers

Combined, these miners produced more than 10 million metric tons of copper in 2018. And we can expect this number to grow in coming years.

Renewable energy and EVs are expected to put the demand for copper on steroids.

Don’t be left out of the run-up.

Good investing,

Dave


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