UKBouldering.com

Cars, Cars, Electric CARS !! (Read 39507 times)

Johnny Brown

Offline
  • *****
  • forum hero
  • Posts: 11437
  • Karma: +690/-22
#75 Re: Cars, Cars, Electric CARS !!
May 14, 2021, 01:30:17 pm
Classic Telegraph. As Scouse says, light on any detail, just hand-waving about things needing energy to be made. The lifetime energy budgets are easily available, but not quoted. Takeaway is you might as well carry on as you were, which is exactly what their readership want to hear.

Quote
None of this to argue that we shouldn’t even be trying.
HA!

[/quote] It’s just that the politicians need to be a bit more honest about the consequences, as well as less starry eyed about the prospects of success.''[/quote]

Perhaps spelling out the prospects of failure might have been a better use of his time.

petejh

Offline
  • *****
  • forum hero
  • Posts: 5778
  • Karma: +622/-36
#76 Re: Cars, Cars, Electric CARS !!
May 14, 2021, 01:42:55 pm
Pretty certain I’m not asserting anything mr scouse d. I’m not interested in taking at face value lobbyists from any walk of life. I’m just interested in details. Find the defensive tone of your response just as off-putting as mr coal’s (inaccurate) assertions tbh.

Scouse D

Offline
  • *****
  • forum hero
  • Posts: 1367
  • Karma: +73/-2
#77 Re: Cars, Cars, Electric CARS !!
May 14, 2021, 02:05:12 pm
Apologies if you weren't asserting. It's difficult to see from your post which parts are you and which are the quotes you've used.

"As things stand, the capacity needed to bring about such a transformation simply doesn’t exist. Massive, emission inducing investment in new sources of supply is required to meet the likely demand."
or
"Yet whatever the modelling used, it is pretty much unarguable that going green will, to begin with, create a huge surge in global emissions. The transition will also result in myriad other forms of environmental and biodiversity destruction."

 If it was a quote then the person you are quoting is asserting, with my point being that this is a totally flawed assertion.  I originally read these as being your words not the words of the telegraph journalist.

By posting the telegraph article I (perhaps incorrectly) assume that you agree with the general sentiment in which case I still recommend the viewing of the video.



petejh

Offline
  • *****
  • forum hero
  • Posts: 5778
  • Karma: +622/-36
#78 Re: Cars, Cars, Electric CARS !!
May 14, 2021, 02:37:00 pm
Ahem..

I don't agree with the negativity of the tone or some of his details - prices of the cheaper shorter range EVs will likely be manageable for most people; and mining can also transition in part to lower carbon energy; and the comparisons of wind farms/gas-fired power stations etc. don't necessarily add up.


However..
if you believe that the quotes in the article, about there not being the mining capacity to bring about the electrification required to achieve global net zero, are untrue then it’s you who is deeply mistaken. This is absolutely the case and I could send you study after study that shows this - not written by old-world energy sector lobbyists but by EV industry analysts.
It’s the reason why I’ve been heavily invested in the mining of nickel, tin and copper (and doing massively well out of it) for the last few years. The picture for those three metalsespecially are excellent from an investor’s POV.. or worrying, depending which angle you look at it from.
The environmental impact about to be unleashed by the massive investment into new mines required by the transition to electric is going to be on a scale not seen since post WW2 rebuilding. People who aren’t invested in the mining industry appear to have their heads in the sand about the required scale of the coming development.
I’m also heavily invested in EV battery r&d companies.. solid state will be a game changer for resource use but it’s not going to happen overnight.

That article has many faults, but it’s likely correct that the next ten years will see a short term carbon increase, or at least not much of any decrease, while the world mines and builds out this new industry. I’m of the opinion it’s far better to know the details about the relative impacts of things. Not because I think the way we do things shouldn’t change but because we can make informed choices rather than get led down paths by zealots of any cause.
« Last Edit: May 14, 2021, 02:46:02 pm by petejh »

Oldmanmatt

Offline
  • *****
  • forum hero
  • At this rate, I probably won’t last the week.
  • Posts: 7097
  • Karma: +368/-17
  • Largely broken. Obsolete spares and scrap only.
    • The Boulder Bunker climbing centre
#79 Re: Cars, Cars, Electric CARS !!
May 14, 2021, 08:25:31 pm
I keep in contact with my erstwhile colleagues in Italy and Electric motors are their “thing”.
They’re raving about this, today, by coincidence. I’m not able to tell if it’s as revolutionary as they seem to think, but I’ve read four or five different write ups on it this afternoon and it seems quite promising:

https://www.motor1.com/news/507298/mahle-magnet-free-electric-motor/

Sorry, meant to say, so copper probably a good investment, rare earth metals, not so much.

andy popp

Offline
  • *****
  • forum hero
  • Posts: 5525
  • Karma: +347/-5
#80 Re: Cars, Cars, Electric CARS !!
May 14, 2021, 08:47:30 pm
We still don't know which car Paul's mother-in-law should buy, proving our utter uselessness.

Moo

Offline
  • *****
  • forum hero
  • Is an idiot
  • Posts: 1444
  • Karma: +84/-6
#81 Re: Cars, Cars, Electric CARS !!
May 17, 2021, 01:20:53 pm
Great video that Scouse, good find. It seems like as the economies of scale kick in the increase in efficiency should massively offset the potential environmental impact.

petejh

Offline
  • *****
  • forum hero
  • Posts: 5778
  • Karma: +622/-36
#82 Re: Cars, Cars, Electric CARS !!
May 22, 2021, 01:13:47 pm
Great video that Scouse, good find. It seems like as the economies of scale kick in the increase in efficiency should massively offset the potential environmental impact.

Yes, we might only need 14 major new copper mines within the next ten years instead of 15 new mines. Oh hang on - copper has nothing much to do with the batteries in an EV, it's needed to roll out the new low-carbon energy infrastructure. Scrap that, 15 new copper mines it is. :)
Did I mention the new tin mine the size of Alphamin's Bisie resource in the DRC required every year for the next ten years required for the solder in circuit boards among other energy infrastructure uses?


*numbers made up entirely for purposes of illustration, and as a counter to wind up the 'EVs are flowers and unicorns' people. There are plenty of industry reports available giving estimates and insight. Here for e.g.
https://roskill.com/market-reports/
https://roskill.com/sustainability-cost-analysis/
http://info.gorozen.com/2021-q1-market-commentary-problems-with-copper
https://www.spglobal.com/marketintelligence/en/

Scouse D

Offline
  • *****
  • forum hero
  • Posts: 1367
  • Karma: +73/-2
#83 Re: Cars, Cars, Electric CARS !!
May 22, 2021, 11:22:26 pm
Cant seem to get past a paywall on any of those links. From the abstracts they all seem to be links saying that we need to mine lots of metals for batteries or am I missing something?
The key for me is that as EVs and the green economy take off there will be less and less burning of fossil fuels. I don't see any reason not to be optimistic about a future where the human race doesn't rely of the unsustainable act of burning said fuels.
Seems a little unnecessarily antagonistic to try to bait by saying 'EVs are flowers and Unicorns' but maybe I'm just a sensitive flower.

petejh

Offline
  • *****
  • forum hero
  • Posts: 5778
  • Karma: +622/-36
#84 Re: Cars, Cars, Electric CARS !!
May 23, 2021, 01:47:31 pm
Yep, you're missing a lot. And yes I'm being antagonistic, my bad.

To state it simply: there's probably not enough copper to achieve the greenhouse emissions goals that governments worldwide have stated they want to achieve. And there isn't enough investment in new copper supply to meet the future demand. The same for tin. Plus maybe some other essential metals. This is likely to lead to volatile side effects.

The stated goal of governments globally is to meet the climate change goal of limiting global temperature increase to 2 degrees above 1990 levels. What matters for greenhouse gas emissions is massive global change not what happens in the UK or Norway. Important to have countries leading the way and developing the tech etc. but there's a bigger story developing in the background about the lack of resources to make the transition.

You can have a transport system of EVs powered by electricity generated by fossil fuels, or you can run EVs on electricity generated by low-carbon and carbon-free sources. 
Copper is fundamental to the new electrical infrastructure required for the transition of the worlds' electricity generation to low-carbon sources - new power stations, wind farms, solar farms, tidal generation, hydro power, battery storage, distribution cables, sub-stations, charging infrastructure and a thousand other new moving parts in the new system. All this new electrical infrastructure is required in every developing and developed country globally, hence it requires a shit load of copper over the next 30 years. It's not much use for global emissions for middle class people in the UK (which has done quite well decarbonising its electricity grid) virtue signalling about their Tesla charging on a green tariff if the rest of the world can't achieve the same thing due to the lack of the basic resources required. As things stand there probably isn't going to be enough to make the plan work.
There are loads of factors in the background, if you read into why supply is insufficient to meet demand you'll read a story of factors all happening around the time we need more, not less, supply. investment has been lacking, but also factors such as the risky jurisdictions where new copper mines are located, the nationalising of resources (Chile, Peru notable e.g's),   one being inflation - the price of copper ( and tin) is barnstorming now and within 2-5 years risks being high enough that it damages demand due to being unaffordable for use in the construction of the new infrastructure. The circle is vicious.

Aluminium can substitute the copper in many cases but it comes with it's own carbon footprint problems. Price of aluminium is also likely to see strong growth from higher demand. We're entering an inflationary period, for all sorts of commodities, not just the metals. Copper is one but the story is similar for other metals needed to achieve the stated goal of accelerated energy transition required to limit greenhouse gas emissions. Bear in mind this increased demand is required alongside the normal growth of consumer demand as population increases. Tin is the stand out - required in everything to do with automation and anything with a circuit board. But also required in parts of the battery tech in EVs. Your consumer electronics are likely about to become a lot more expensive, people are already hoarding laptops now because they expect the prices to rocket in the next few years due to circuit board shortages. The shortage of circuit boards is, like copper, a demand and supply problem - demand is increasing from various new tech some linked to decarbonisation of the power supply grid but many other uses too. Picture for tin supply is tight and not expected to grow in line with demand, due to various factors including smelter closures in China, Myanmar conflict, historical lack of investment in new mines, and the poor ESG of much tin mining - 'conflict tin' and environmental damage from alluvial tin mining. As per copper, this story has created massive inflation of tin prices which in turn risks overheating to the point of demand destruction as it becomes unaffordable. Demand destruction leads to supply reduction. Vicious circle.

None of the issues are insurmountable, recycling will make a bit of impact, scrap used to power electric arc furnaces for steelmaking for e.g. is a growing technology, substitution to cheaper materials will probably have to happen, new tech will be developed in all sorts of areas required for efficiency gains. But I think there's an increased likelihood we see mass civil unrest linked to this supply shortage narrative, and a high likelihood of resource conflicts between the major powers within the next 10 years in proxy conflicts with the root cause being the supply of basic resources such as tin, copper and other commodities required for the manufacture of advanced civil and military technologies. The US has got itself into a vulnerable position by not securing the supply of essential resources it requires while China has prepared well by hoarding resources or monopolising the metals processing industry.
In such an inflationary and supply shortage picture, an obvious alternative path is that some governments choose to regress to the obvious relatively cheap and plentiful alternative - fossil fuels - and slow their transition over to low carbon electricity. Mass-scale affordable carbon capture and storage technology could encourage this, and there are interesting investment stories in that area emerging right now.

I think the transition to low carbon electricity generation is inspiring and exciting and I'm looking forward to changing over to an EV. But I like to know the details, I think most people considering EVs in the UK haven't got a clue what's really going on with the supply of natural resources required for the electricity supply of the whole world to transition from fossil fuels - not just for the middle-class virtue-signallers of the lake districts of this world to make the transition. Or what's likely to play out politically over the next 10-30 years as a result of the resource demands caused by this change. So I tend to view early adopters' signalling about their green credentials as vapid and meaningless gesturing; far better for a global problem like climate change would be to try to understand the bigger picture and address the problems. Of course it would all have been better if governments had been braver and started the transition in the early 90s, but we all like low prices and low taxes..


If you want to understand more here's a non-paywalled 2 part series on the problem of copper supply for the global energy transition, with various links to go off into:
https://www.woodmac.com/news/opinion/will-a-lack-of-supply-growth-come-back-to-bite-the-copper-industry/
https://www.woodmac.com/news/opinion/build-or-buy-are-the-copper-majors-rising-to-the-growth-challenge/

Substitution copper/aluminium, high price of copper etc:
https://www.woodmac.com/news/opinion/could-soaring-prices-see-copper-fly-too-close-to-the-sun/

Here's a link to a report on the role of scrap recycling:
https://www.woodmac.com/news/opinion/is-the-energy-transition-road-paved-with-scrap-metal/

Here's something on the current moves by countries towards resource nationalism:
https://www.maplecroft.com/insights/analysis/resource-nationalism-surges-in-2020-covid-19-worsens-outlook/

Future copper supply versus demand:
« Last Edit: May 23, 2021, 02:00:28 pm by petejh »

Scouse D

Offline
  • *****
  • forum hero
  • Posts: 1367
  • Karma: +73/-2
#85 Re: Cars, Cars, Electric CARS !!
May 23, 2021, 06:55:23 pm
Thanks Pete, I will read those later.

lagerstarfish

Offline
  • *****
  • forum hero
  • Weapon Of Mass
  • Posts: 8810
  • Karma: +812/-10
  • "There's no cure for being a c#nt"
#86 Re: Cars, Cars, Electric CARS !!
May 23, 2021, 07:00:23 pm
Hold on.
So, not only is there not a magic money tree; there isn't a magic copper tree either?

tomtom

Offline
  • *****
  • forum hero
  • Posts: 20282
  • Karma: +641/-11
#87 Re: Cars, Cars, Electric CARS !!
May 23, 2021, 07:06:51 pm
Hold on.
So, not only is there not a magic money tree; there isn't a magic copper tree either?

Yes there is. It’s next to the magic 8A tree!

Scouse D

Offline
  • *****
  • forum hero
  • Posts: 1367
  • Karma: +73/-2
#88 Re: Cars, Cars, Electric CARS !!
May 23, 2021, 08:16:29 pm
Had a read Pete and they are interesting pieces but not surprising.  For the entirety of my lifetime the petroleum industry has found ways around the finite nature of their raw material of choice, plumbing greater depths and coming up with ingenious solutions to suck every drop of oil from the earth. That there are not enough known sources of copper on earth comes as no surprise and even with the potential unknown reserves that they have factored in to their analysis there is still a shortfall also comes as no surprise. My prediction is that the copper will be found because where there is copper there is money.  You clearly have your finger on the pulse when it comes to investing so it will be interesting to see how it pans out.
The marvellous thing from all of this is that the world is moving away from oil. I am under no illusions that this transition is not going to be without vast logistical challenges and potentially some short term environmental issues (we seem to agree on this point) but this is a paradigm shift and a lot of industries and investors are going to have to adapt quickly to avoid being left behind.
I feel that we agree on many issues Pete, maybe I am slightly more optimistic about the future than you?

I am not an early adopter just so you know. I drive a dirty diesel but will never buy another ICE vehicle. I've not met anyone who drives an EV who I would consider to be virtue signalling, just nice people who didnt want to put petrol in their cars anymore. I love seeing more and more EVs on the roads as they signify a global shift in attitudes and an increasingly significant shift away from burning fuels.

tomtom

Offline
  • *****
  • forum hero
  • Posts: 20282
  • Karma: +641/-11
#89 Re: Cars, Cars, Electric CARS !!
May 23, 2021, 08:55:03 pm
EV’s are the only ‘acceptable*’ way to tackle urban air pollution over generational time scales. 

*(As in something I could envisage happening given our societal love of the car…)

Scouse has some good points. I fully expect there to be enough copper - raise the price enough and you shift the scope of prospection further - underwater mining for example. The same argument was raised about Oil 30-40 years ago, and we still seem to find remote untouched parts of the planet where there is enough…

By then I expect we may have found an alternative…

I find it odd hearing about your copper investments in seemingly every other post Pete. Maybe keep them to your investment thread? :)

petejh

Offline
  • *****
  • forum hero
  • Posts: 5778
  • Karma: +622/-36
#90 Re: Cars, Cars, Electric CARS !!
May 24, 2021, 10:03:27 am
Talking about EVs without talking about copper and the other metals required to build the low-carbon electricity supply is like talking about internal combustion engines without talking about fossil fuels. I'll keep talking about it. :)


You're also probably incorrect about plentiful copper and raising prices. Raise prices enough and you destroy demand and price out the average consumer. Substitutions then apply, but only if the substitution is cheap enough - aluminium estimated to also become expensive.
As for plentiful copper - if you'd read the literature you'd know the copper mining industry can't lower their cut-off grades much more than they have. The industry has been lowering the economic cut-off grade for years to increase their resources without spending capex on exploration. The limit has been reached - see the log curve distribution of a typical porphyry deposit for the reason why (it drops off sharply at the left tail).
« Last Edit: May 24, 2021, 10:14:34 am by petejh »

dunnyg

Offline
  • *****
  • forum hero
  • Posts: 1521
  • Karma: +91/-7
#91 Re: Cars, Cars, Electric CARS !!
May 24, 2021, 10:19:31 am
Less exciting than underwater mining, it is just the cost of recovery. E.g., for oil, $150 a barrel would let you drill much deeper, to a smaller amount of poor quality oil, in a more logistically difficult area and use enhanced recovery methods, than $30 a barrel. When people talk of oil reserves take into account the oil price, whereas resource does not.

For metals this will mean that significantly lower grade deposits, previously written off because production costs much more than the value of the the metal. Seafloor mining is one extreme end of this, sure, but the main realistic impact would be on those low grade deposits.

Scouse D

Offline
  • *****
  • forum hero
  • Posts: 1367
  • Karma: +73/-2
#92 Re: Cars, Cars, Electric CARS !!
May 24, 2021, 11:01:03 am

 The industry has been lowering the economic cut-off grade for years to increase their resources without spending capex on exploration. .

Shouldn't they just spend capex on exploration? Genuine question.


tomtom

Offline
  • *****
  • forum hero
  • Posts: 20282
  • Karma: +641/-11
#93 Re: Cars, Cars, Electric CARS !!
May 24, 2021, 11:24:10 am
Seems the concept of 'Peak Copper' is even more widely discounted than that of Peak Oil...

This is old - but an interesting read... https://en.wikipedia.org/wiki/Peak_copper

I fully expect Pete to come back with a rebuttal, but
Quote
The US Geological Survey estimated that, as of 2013, there remained 3.5 billion metric tons of undiscovered copper resources worldwide in porphyry and sediment-hosted type deposits, two types which currently provide 80% of mined copper production. This was in addition to 2.1 billion metric tons of identified resources. Combined identified and estimated undiscovered copper resources were 5.6 billion metric tons,[34] 306 times the 2013 global production of newly mined copper of 18.3 million metric tons.

(global production about 20 mill tons now..)

The last section (criticisms) is quite an interesting rebuke of the whole Peak commodity argument...

petejh

Offline
  • *****
  • forum hero
  • Posts: 5778
  • Karma: +622/-36
#94 Re: Cars, Cars, Electric CARS !!
May 24, 2021, 12:07:31 pm
Yes, it's easy to rebut your - unresearched - assertion that there's plenty of copper at affordable prices.

Read this, it mentions your US Geological Survey and explains the depletion problem and why the copper industry can't continue to lower cut-off grades any further.
https://f.hubspotusercontent40.net/hubfs/4043042/Commentaries/2021.Q1%20Commentary/2021.Q1%20Goehring%20%26%20Rozencwajg%20Market%20Commentary.pdf
Copper mining companies aren't charities - the economic cut-off grade is everything in mining, go below it and you spend money to extract uneconomic waste rock. Prices can go to the moon but the log curve of a porphyry deposit means that below a certain cut-off the economics will never work out.

Also this blog gives you some similar pointers, and mentions the problems with your US Geological survey - one problem being jurisdiction risk (remember Chile and Peru from my post higher up..). https://aheadoftheherd.com/copper-con/


Or, just use your eyes TT. The copper price isn't a flash in the pan. You could accept evidence from people who've spent careers analysing commodities industries or you could believe a wikipedia page. I get the impression you'd rather believe what you want to hear rather than what the evidence suggests. If you think there's no shortage of economic copper to meet current and future demand then you'll need to refute the current market conditions using something a bit more credible than a wikipedia page.

None of which is meant to imply that I'm a ramping 'peak copper' zealot - I'm doing very well out of it thanks but I'd rather there were plenty of cheap resources for a seamless global clean energy transition. I find it weird that no-one is talking about what's going on in front of their eyes. And when it's pointed out, people want to go lalala.
« Last Edit: May 24, 2021, 12:14:38 pm by petejh »

petejh

Offline
  • *****
  • forum hero
  • Posts: 5778
  • Karma: +622/-36
#95 Re: Cars, Cars, Electric CARS !!
May 24, 2021, 12:30:56 pm

 The industry has been lowering the economic cut-off grade for years to increase their resources without spending capex on exploration. .

Shouldn't they just spend capex on exploration? Genuine question.

Capex is increasing this year, but there are problems (remember jurisdiction risk - why on earth would any company now invest capex in mining exploration in Chile - world's largest producer of copper, or Peru, to have 75% of their margin taken by the government when they could have 40% taken off elsewhere).
https://www.bnamericas.com/en/news/mining-capex-set-to-rise-as-greener-economy-boosts-copper-deficit

Easier to just quote one of the Wood Mac reports:
Quote
Grade decline and depletions: a never-ending story
As anyone familiar with copper mining knows, grade decline and attrition is a constant issue. The industry has to continually replenish supply just to maintain output. Add to that the impact of increased demand and the need for investment quickly accumulates.

To meet our base case demand and counter grade decline and depletions over the next ten years, we estimate the industry will need to commit around an additional US$130 bn to deliver a further 6.5 million tonnes of copper supply per year (Mt/a). Adopting a two-degree climate change pathway — our Accelerated Energy Transition Scenario -2 (AET-2) — would add around a further 9 Mt/a by 2030, taking the total investment requirement to an eye-watering US$325 bn.

Is this achievable? Clearly it would stretch investor appetite and corporate financing capability, potentially to breaking point. Given lead times, investment needs to be mobilised in the next two to three years – and even this won't prevent market shortages mid-decade, which are essentially 'baked in’ due to insufficient elasticity of supply.

Is there a shortage of copper projects?
The 17 Mt of identified projects available to be green-lighted may seem more than enough to meet demand. However, many projects are in risky jurisdictions, with complicated geology and construction, ever-more-stringent ESG requirements and lower than ideal internal rates of return: not the usual hunting grounds of the copper Majors, who tend to prefer the richer pickings of low-risk jurisdictions and long-life, low-cost assets.

These issues notwithstanding, the challenge of meeting demand largely comes down to timing. The market and the wider industry looks to the major copper miners to take the lead in sanctioning projects and the expression of confidence in new markets that this projects. That they have been in no rush to develop projects is perhaps surprising, given their own assertions that the energy transition is a one-way ticket to the stars.

How are the copper Majors performing on market share?
Basically, the copper Majors are not even treading water in terms of market share. We classify a Major as an entity that owns at least 500 kilotonnes per year (kt/a), or could produce in excess of 500 kt/a of mined copper through base case and potential expansions, whether committed or not. There are 13 entities that meet these criteria and collectively they accounted for nearly 10 Mt/a of copper production in 2020, for a global market share of 47%.

However, the major copper producers will collectively experience a net decline in output of 800 kt/a by 2030, without further project development. Set against an increase in market demand of around 6 Mt/a, this means the Majors’ collective market share will decline to just 34% (assuming no further projects are sanctioned). The situation will become acute by 2040 when, without further investment, the ‘Big 13’ copper Majors’ output will decline to 7 Mt/a, or less than 25% of global output.

Can the copper Majors arrest the decline in their output?
Collectively, the Majors own equity in as-yet-unsanctioned projects with an attributable output of 7 Mt/a that could potentially be brought online by 2030. Enough in theory to cover booming energy transition demand and raise market share – but only under a 3-degree base case outlook. And many projects will fall by the wayside, while others will be delayed or deferred.

We believe it is highly unlikely that a significant proportion will be green-lighted to come on stream in the second half of the decade. Those that are will almost certainly take longer than estimated to deliver, given there will be myriad mine projects for energy transition commodities competing for project delivery resources.

Winners and losers in the growth race
Assuming all the probable and possible projects in their portfolios are sanctioned, Freeport-McMoRan Inc. and Anglo American plc stand out as having the largest net growth potential at around 1 Mt/a and 0.8 Mt/a respectively, with each company increasing their market share by 2.5 percentage points by 2030.

Grupo México (including SPCC) claims ownership of the largest reserves in the industry, and also has the potential to raise its production by around 0.8 Mt/a, equivalent to an increase in market share of just over 1.7 percentage points.

Glencore plc has the largest potential project-based growth of around 1.1 Mt/a but will suffer from a significant drop-off in base supply of -0.5 Mt/a over the period: as a result its potential market share only rises by one percentage point.

Other major producers’ increases in market share will each be less than one percentage point — hardly a land grab. This begs the question: where is the growth to match the ambitious increase in demand projected by many of the same producers? With one or two exceptions, there is a mismatch between copper’s green growth story and actual ’boots on the ground’ project development.

Could boards become heroes by doing nothing?
Of course, the cynic might argue that it’s in producers’ interests to hold off developing supply. As demand rises inexorably, and absent project development, shortages increase and prices continue to rise.

For miners that means greater free cashflow and profit generation. With capital expenditure constrained, dividends remain high or even increase and company valuations rise, heralding the return of miners as growth stocks.

For an investor, what’s not to like? So long as the capital destruction of the last super-cycle remains a dim, distant memory, the party begins in earnest and boards become the life and soul simply by sitting on their hands.

Should the Majors buy their way out of trouble?
However, that’s a pretty shortsighted view. Without the music of project development to keep things moving the party will eventually grind to a halt. Investors will seek growth in copper supply to cash in on demand and may look elsewhere if it is not apparent. Worse than that, unreasonably high prices combined with a lack of visibility on reliable, ESG-compliant supply could bring forth the spectre of substitution as consumers look to alternatives.

The question then becomes whether to build or buy? While it leaves the fundamental issue of a lack of overall project development unresolved, companies may choose to buy their growth. With borrowing costs low, equity valuation not yet at its peak now may well be the time to consider this option. Acquisition could offer an attractive opportunity to take a bigger bite out of the copper pie, attaching lower and known risks, and a guaranteed production stream. It could become a feeding frenzy.

Whichever way investors tilt the activity of their boards, action is needed and that is what is missing. To quote Sir Winston Churchill, “I never worry about action, but only inaction,” and it is inaction on project development that has to be a concern.
« Last Edit: May 24, 2021, 12:37:50 pm by petejh »

tomtom

Offline
  • *****
  • forum hero
  • Posts: 20282
  • Karma: +641/-11
#96 Re: Cars, Cars, Electric CARS !!
May 24, 2021, 06:58:53 pm
Yes, it's easy to rebut your - unresearched - assertion that there's plenty of copper at affordable prices.

I never mentioned price. I never suggested that it was cheap, expensive or affordable (BTW - I'd avoid affordable as it is a very elastic term - as the affordability depends on how important it is balanced with how much money you have) simply that there are loads and loads of copper resources - many of which are not economic to exploit at the moment - but that may well change. Not being facetious - just its important to the above point!

FWIW, I've worked with the Uranium mining industry for nearly 20 years now - and one thing I've learnt about the big mining corps is that they're in this for the long term. They'll happily dig something out and leave it in a big pile for tens of years until the price is right to process and sell it. I've seen mines mothballed, reopened, thrive, threat with closure (and repeat) during this period as the price waxes and wanes.

Theres a classic case of the long game where they found a red hot uranium deposit in Arnhem land (Traditional Owners land) and with little permission dug it out (long incline shaft) found out how much it was worth (A LOT) then put it all back again and filled up the hole. Knowing the present political situation (1980's) meant they were unable to extract it - but legally had a 'claim' to when the owners of the land changed (the ruling councils change from time to time). Its still there - but when the price is right....

abarro81

Offline
  • *****
  • forum hero
  • Posts: 4289
  • Karma: +341/-25
#97 Re: Cars, Cars, Electric CARS !!
May 24, 2021, 07:22:58 pm
Raise prices enough and you destroy demand and price out the average consumer.

What's copper/tin as a % of final system price for most of these things? I have no idea for most stuff.. for solar it's certainly small enough that its v v unlikely to drive demand elasticity. The biggest driver in a panel (polysilicon) has gone up 3x recently with limited impact on demand (will come down again, that's just a fluctuation). if EV is cheaper than ICE even with high copper price you might find demand "surprisingly" resilient to price (if EV is a key driver of demand).
There's no doubt we're moving to a hugely more electrified world so questions around resources for this are definitely key questions...

petejh

Offline
  • *****
  • forum hero
  • Posts: 5778
  • Karma: +622/-36
#98 Re: Cars, Cars, Electric CARS !!
May 24, 2021, 07:47:41 pm
I never mentioned price. I never suggested that it was cheap, expensive or affordable (BTW - I'd avoid affordable as it is a very elastic term - as the affordability depends on how important it is balanced with how much money you have) simply that there are loads and loads of copper resources - many of which are not economic to exploit at the moment - but that may well change. Not being facetious - just its important to the above point!

Not having you get away with that caveat TT - you can't say you 'fully expect there to be enough copper', have me point out to you that actually no - there isn't enough copper for the expected demand from the coming energy transition to reduce emissions in line with 2% above 1990s, alongside general GDP growth - and then claim 'ah.. what I meant was there's loads but it's uneconomic to mine'. :lol:

I've already pointed out to you that much of the copper is uneconomic to mine. I've pointed out the reason why it's uneconomic to mine, and I've also posted why this isn't gong to change - the point you're missing is the economics aren't elastic beyond a point and the industry is v.near that point.
As I said but will say again.. copper mining majors have been working down the cut-off grades of their resources to the bare minimum since around 2013 (to around 0.20 - 0.25%) in order to increase or maintain their reserves/resources while skimping on exploration capex. Problem being, the grade distribution curve of typical copper porphyries means that the low grade on left tail of the curve drops off so sharply that below this cut-off grade the price of copper could go to the moon on a stick but the exponential decline in grade would still make that copper uneconomic to dig out, due to the massive amount of waste needing to be shifted to extract the ore. That's the stage the copper industry is now at according to many analysts. Without massive capex for exploration there isn't the supply. And its compounded by pressures of ESG and some S.American states wanting 75% tax take.

Yes there are plenty of 'new' old resources that used to be uneconomic which are being developed with new eyes and new tech (and new copper prices) - I'm invested in one prime example (Meridian Minming), which is an old BP Minerals/ Rio Tinto gold-copper deposit that was abandoned after the gold price tanked in the late 80s. They didn't touch the copper back then because it wasn't economic; it's now worth a fortune. They also left behind any gold below their 3 g/t cut-off grade. Today that cut-off for gold is highly profitable. The industry is full of such investment narratives.. it doesn't alter the picture that the world is very likely going to experience a short and medium term copper supply deficit (already in one some would say).


Uranium apparently set to do very well out of Biden's green policies.. Haven't taken much interest in the state of play but keep reading snippets. Happy to focus on copper tin and nickel for now!
« Last Edit: May 24, 2021, 07:52:46 pm by petejh »

petejh

Offline
  • *****
  • forum hero
  • Posts: 5778
  • Karma: +622/-36
#99 Re: Cars, Cars, Electric CARS !!
May 24, 2021, 08:42:17 pm
Raise prices enough and you destroy demand and price out the average consumer.

What's copper/tin as a % of final system price for most of these things? I have no idea for most stuff.. for solar it's certainly small enough that its v v unlikely to drive demand elasticity. The biggest driver in a panel (polysilicon) has gone up 3x recently with limited impact on demand (will come down again, that's just a fluctuation). if EV is cheaper than ICE even with high copper price you might find demand "surprisingly" resilient to price (if EV is a key driver of demand).
There's no doubt we're moving to a hugely more electrified world so questions around resources for this are definitely key questions...

I should  have been clearer, by 'consumer' I meant the consumer of the copper materials needed to construct the electrical infrastructure required for a low-carbon electrified world. So the governments, private companies and end users of that infrastructure. Rather than individual car purchasers. It all comes down to the consumer eventually though, either through tax rises or higher unit prices.

As for individual EVs versus ICE vehicles, I don't know the % of price attributable to the copper components. A very quick search suggest EV's use 3 -4 times more copper than an ICE but I don't know the overall price breakdown.
https://www.woodmac.com/news/opinion/copper-powering-up-the-electric-vehicle/

 

SimplePortal 2.3.7 © 2008-2024, SimplePortal