In my opinion an investment in MTR is a waiting game. Then take up of additional Sandfire shares following the recent rights issue looks like very good timing. MTR has made a significant paper profit on Red Dirt Minerals (RDT ASX)over the last few weeks. The NAV as at should show a substantial increase providing equity markets hold up. Talk of a commodities supercycle is not without merit.Ĭharaxes1: Evening MP. Assuming central banks around the world maintain relatively benign monetary policies as QE programmes are wound down, then the commodity complex should continue to perform well in a negative real interest rate environment. It's worth noting, too, that many investors buy commodities as an inflation hedge. That’s good news for Trident, which owns a valuable royalty over the Thacker Pass lithium open mine project in Nevada, one of the largest known lithium deposits in North America. It’s already happening: the lithium carbonate equivalent (LCE) price has risen fourfold since the start of 2021. The same dynamic is positive for Sylvania Platinum (SLP:90p), a cash-rich, fast-growing, low-cost South African producer and developer of platinum, palladium and rhodium.Īnother way of playing the green revolution is through companies that will profit from increased demand for electric vehicle battery metals. Jubilee’s exposure to platinum group metals (PGMs) has green credentials, too, given that the emergence of the fuel cell, particularly in China, is likely to drive up the PGM price as demand for such energy increases over the coming years. The large copper systems that are now in favour are few and far between and have a gestation period of some 12 years.” I see the supply side being severely challenged, with Chile, as a major contributor to the copper supply, being challenged technically and socially. Colin Bird, chairman of Jubilee Metals, notes that “the outlook for copper in particular remains buoyant, with many predictions that the year 2030 will see a doubling in demand. Rising copper demand augurs well for miners’ profits at a time when there are constraints to supply growth. Three companies on my small-cap watchlist – Aim-traded Metal Tiger (MTR:21p), Jubilee Metals (JLP:17p) and commodity royalty group Trident Royalties (TRR:38p) – offer exactly that. That’s a good reason to have exposure to copper producers. Commodity experts at investment bank Bernstein forecast that copper demand from renewables and electric vehicles could grow more than seven times by the 2050s, if the world is going to meet its net-zero greenhouse gas emissions target. Wind farms and solar panels require up to five times more copper than is needed for fossil fuel power generation, and electric vehicles use four times as much copper as internal combustion engine vehicles.Īnalysts at research consultancy CRU estimate that wind turbines, electric vehicles and other 'green' technology will require 6m tonnes of refined copper by the 2030s, accounting for 20 per cent of forecast global consumption.
The shift away from fossil fuels is clearly gathering momentum and this has major implications for other commodities.Ĭopper is a major beneficiary from greater demand for electricity given that a higher portion of future power generation is forecast to come from renewable energy. It's worth noting that a robust oil price supports an accelerated transition to environmentally friendly energy alternatives.
Although markets have become volatile following the recent emergence of the Omicron coronavirus variant, relatively strong global demand means it’s sensible to expect the oil price to remain at elevated levels unless national lockdowns return for prolonged periods. The oil price subsequently rallied 68 per cent by the autumn of 2021 and the natural gas price soared 144 per cent. In the oil sector, I felt that the combination of well depletions, underinvestment in new oil and gas fields, and an uptick in demand driven by a global economy on the rebound, could all construe to create a perfect storm for black gold in 2021. I was also heeding the bigger picture across the commodity spectrum. The potential for a strong global economic recovery in 2021 was one reason for being long of commodity stocks in 2021 (‘Reasons to be bullish’, IC 18 December 2020). Here's the part of Simon Thompson's 'Secrets of Successful Investing' that highlights Jubilee Metals (13th January 2022):
The bull: From SEV22 on the Jubilee Metals Thead
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