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The copper price hit its highest level since 2011 this week, as the impact of the global response to and recovery from the coronavirus crisis continued to roll out into the wider economic environment.

As it stands, supply is just about keeping up with demand, but with strikes in major producing country Chile set to disrupt ports and hence exports, there is an eagerness abroad in the markets generally to secure product in the event of a squeeze.

The demand is rooted of course in economic activity in the world’s two economic giants: the USA and China. The Chinese economy is now firmly back on the heady growth trajectory it had been consistently charting in the years prior to the coronavirus crisis, consequently sucking in huge amounts of copper as infrastructure growth continues, and copper wiring for new homes and offices remains a high priority.

In the USA, economic growth has been more modest in recent decades. Nevertheless, President Biden’s US$1.9bn infrastructure programme has lifted metals markets as a whole, with copper a major beneficiary. And although it’s the largest, the US stimulus package is only one of several that have been enacted by the governments of the world’s major economic powers over the past 12 months.

In short, there’s more money around to spend on making things. And these days, making things invariably involves the use of copper. Add to that the likelihood of an exponential increase in copper consumption from the world’s automakers as electrification gathers pace, and all the hallmarks of a bull market in copper are in place.

This isn’t new, of course. The writing’s been on the wall for some time.

Earlier this month, for example, research from Goldman Sachs noted that further strength in the copper markets was likely, even though gains in the price had already been quite significant. Goldman analysed the market in the context of several of the largest copper miners, including BHP (LON:BHP), Glencore (LON:GLEN), Rio Tinto (LON:RIO), Freeport McMoRan (NYSE:FCX) and OZ Minerals (ASX:OZL), noting that although short-term upside from stimulus money is already working its way through the system, there will be more to come longer term as the world goes green.

“While the copper equities we cover,” wrote Goldman, “are up 34% relative to the commodity in the last 12 months, we still believe there remains potential for stocks to re-rate higher as we rapidly approach peak copper supply as underpinned by green demand acceleration. Within our global coverage, we favor equities with attractive copper assets, both near-term longer term growth potential, and undemanding valuations.”

Goldman favours, in particular, Freeport, First Quantum (TSE:FM), Lundin, BHP, Anglo American (LON:AAL) and Glencore. Of 12 major copper companies analysed, only one – Boliden – rated a ‘sell’. All the rest were either ‘buy’ or ‘neutral’.

Goldman reckons that the green revolution is likely to create “a record wide supply gap by 2030”, while on the supply side not many big new projects are coming on stream.

“Given the long-cycle nature of copper,” the broker added, “supply may not be readily available to meet demand by the second half of the decade.”

It’s this kind of thinking that’s underpinning the current price strength in markets, and which is likely to continue to do so.

It’s also helping to stimulate a rush of new money into copper exploration at the more junior end of the market. In Australia, much activity is occurring on the hot copper district of the moment, the Lachlan Fold Belt, where companies like Kincora Copper (CVE:KCC) are trying to replicate the earlier successes of the now established mid-tier company Alkane Resources (ASX:ALK).

Elsewhere, companies like Asiamet (LON:ARS), Arc Minerals (LON:ARCM), Strategic Minerals (LON:SML), Hot Chili (ASX:HCH), Mineral and Financial (LON:MAFL), and Power Metal Resources all looks set to benefit in varying degrees from the ongoing surge in copper prices.

Given that Goldman Sachs reckons copper could go as high as US$15,000 per tonne by 2025, it’s surprising neither that people are piling into copper companies, nor that markets are open for business when it comes to funding.

In that regard, Asiamet is perhaps one of the companies most worth keeping an eye on. It’s about to update on a feasibility study previously completed on its BKM project in Indonesia, and expects to wrap up project finance shortly after that.

The terms it can get and the interest it can create will be closely watched by the up-and-coming generation of new copper developers. The signs at this point are distinctly hopeful.

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