(Kitco News) – The combination of constrained supply and rising demand will keep copper prices elevated for years to come, which will also support copper miners at every stage of the development and production pipeline, according to Robert Wares, President and CEO of Osisko Metals.
Wares sat down with Kitco Mining at Xplor 2024 in Montreal. He said that burgeoning demand from electrification will be the major driver for copper prices going forward. “It is the critical metal, without a doubt,” he said.
“The growth is going to come mostly from increased demand from grid networks,” he said. “If we're going to decarbonize the planet, whether it's transportation industry, energy generation, energy storage, it just requires copper. And the independent analysts all pretty much agree that production has to double to meet demand by 2050. Doubling global production, which is just under 30 million tons, up to 60 by 2050 is arguably virtually impossible.”
Wares agrees with the assessment that the world will enter a global copper supply deficit in 2025, and he thinks it will last at least five years. “That should translate into much healthier spot prices and futures prices, of course, but it's not going to make any difference [for supply],” he said. “You still have to go through a permitting process, and it takes time, so I can't see any significant global production increase for at least five years, and it's going to lead to a serious crunch.”
“I don't know how the Western economy – or the global economy – is going to deal with it, because it's never happened before, such a long-term deficit.”
Looking ahead, Wares said that Osisko Metals is now working on new resource and geological models for their Gaspé Copper project, which should be ready by the end of this year. “I think it'll come out as very good news to the market,” he said. “And then 2025, that's going to trigger a lot of drilling to prove it up. But I'm confident we can look forward to a significantly larger resource, and in a rising copper market.”
Wares said he’s also very optimistic about the copper price next year, and its impact on the project’s development.
“I think copper prices will stay very healthy,” he said. “I can easily see copper over five bucks. It's been stable over four dollars now for a while, and I think we can look forward to four bucks being the base support level for copper next year. And if copper can stay between four and five bucks next year, it's just the beginning of a long-term bull cycle.”
“The timing will be great, we'll hit the wave,” he added. “Investors should seriously look at investing in serious copper projects.”
Coverage of Xplor 2024 was sponsored by Radisson Mining Resources.
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