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Copper's price will more than double due to elevated demand and green technology - Rob McEwen

Kitco News

(Kitco News) - The price of copper, currently trading near $3.50 per pound, could skyrocket to "$6 or $8" on the back of heightened demand, said Rob McEwen, Chairman of McEwen Mining.

"The world wants to electrify the energy transition," said McEwen. "When you read all the projections of auto manufacturers increasing their electric vehicle production lines… there is not enough copper right now to satisfy that demand."

BloombergNEF's energy research recently found that, given the trends towards decarbonization, copper demand will rise by more than 50 percent by 2040.

However, whether copper mining can keep up with demand is uncertain.

"It takes longer to build copper mines today," McEwen explained. "There's more permitting required, longer lead times, and the capital is going up… you're talking about a decade, almost."

McEwen spoke with David Lin, Anchor and Producer at Kitco News, at the Precious Metals Summit in Beaver Creek, Colorado.

Copper Economics

Although copper is down 20 percent year-to-date, its price has risen 20 percent over the past five years. In the late nineties, copper traded below $1 per pound, more than half its present-day value.

"You had rapid urbanization taking place in Asia," said McEwen, explaining the price increases. "China was the largest consumer of all metals in the last five or six years."

He also pointed to adoption of "regenerative energy technologies" like windmills, which use "1,500 pounds of copper." McEwen added that it is difficult to find substitutes for copper.

"Maybe someone's going to come up with a nanotechnology that has the same properties [as copper]," he suggested. "That's a bit of a way off."

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Fed policy

The Federal Reserve's Open Market Committee is meeting on Wednesday to decide on a rate hike. McEwen predicted that they would hike rates by 75 basis points.

He added that inflation cannot be tamed with "interest rates as low as they are."

"[In the] late Seventies, it took 15 to 18 percent interest rates to tame inflation," said McEwen.

The Fed has raised its key interest rate by 225 basis points over the year, but McEwen said that "there are a lot of factors" at play.

"The amount of monetary stimulation that has taken place in the last few years and the amount of debt that's accumulated at all levels ensure that we're going to have higher rates of inflation," he said. "It's being compounded by the conflict of Russia in the Ukraine, and COVID came along and disrupted supply chains."

To find out McEwen's thoughts on Bitcoin, watch the video above.

Follow David Lin on Twitter: @davidlin_TV

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