How Copper's Growing Demand Is Creating Newfound Value For Mining Firms

Benzinga

Reported economic insight from Sprott suggests copper may be entering a supercycle, which is defined as a sustained period of expansion, usually driven by robust growth in demand for products and services. A macroeconomic shift of that nature would benefit companies capable of supplying copper to the market, as they would reflect some of the fundamental economic value derived from the critical mineral and be a potential source of wealth-building for investors.

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00:00Recently, copper prices passed the $10,000 per ton mark propelled by projections of tightening

00:08global supplies and heightened demand from the electric vehicle and power sectors, which

00:13offset weakening demand from China.

00:15Reported economic insight from Sprott suggests copper may be entering a supercycle, which

00:20is defined as a sustained period of expansion usually driven by robust growth in demand

00:25for products and services.

00:27Economic supercycles tend to produce strong, sustained demand for raw and manufactured

00:31materials such as metals and plastic that exceeds what commodity producers can supply.

00:37Supercycles, which are also good for stock prices, are often associated with long-term

00:42periods of growth for the commodity markets.

00:44Copper is a predominantly long-cycle commodity.

00:47The process from discovery to production is lengthy, averaging 16.5 years.

00:53This long lead time for the majority of copper supply combined with the mining sectors resistant

00:57toward new project capital expenditures leaves the copper market in a precarious position

01:02regarding securing the necessary supply to meet expected future demand.

01:06Simply put, with the demand for copper growing, there could be significant price appreciation

01:11if producers are unable to provide sufficient supply in the medium to long term.

01:16Both the Sprott Copper Miners ETF trading on the NASDAQ under ticker COPP and the Sprott

01:21Junior Copper Miners ETF trading on the NASDAQ under ticker COPJ provide pure play exposure

01:27to a broad range of copper miners positioned to capitalize on the increased demand for

01:32copper and its usage in electrification.

01:34Though both funds share a thematic focus on capitalizing on the growing demand for copper

01:39and its integral role in transitioning to a carbon neutral society, COPP provides comprehensive

01:45exposure to mining companies across the large, mid, and small capitalization spectrum.

01:49In contrast, COPJ predominantly focuses on small copper miners with the potential for

01:55significant revenue and asset growth.

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