Copper is Crashing, but When Does it Stop?

On Monday, June 6, 2022, I had the chance of sitting down with Christian Kargl-Simard, a copper industry expert and CEO.

We did an overview of the whole copper thesis. The copper demand vs supply dynamics. Copper inventories. The risks of investing in copper. China and copper. Recycling of copper. Innovative technology in copper, and much more.

Christian told me that copper is the new oil, and that copper is the absolute best metal to play the green revolution with.

As Kargl-Simard sees it, the risk/reward for copper is very much skewed to the upside, as he believes $4/lbs is the new bottom line for copper, while big banks have set their expectations for copper to go up to $45/lbs.

This is mainly thanks to the increasing demand for copper, the increase in challenges around copper production, and the depleting above-ground inventories of copper which are now under 10 days, which appears to be very low.

Christian told me that he thinks the copper stocks are significantly lagging the market because of reasons unbeknownst to him, and that makes him even more so bullish on the smaller market cap companies, which are lagging the big copper producers, and the copper price alike. The majority of Christian’s net worth is invested in copper, and he is the CEO of Adventus and the chair of Surge Copper – which I also own to my own name.

Important warning

Antonio Atanasov is not an investment advisor. Antonio Atanasov owns shares of companies mentioned in this publication. The information provided in this publication – and all other publications by Resource Talks – is impersonal in nature and meant for general information purposes only. Before taking any action on any investment, it is imperative that you consult with multiple licensed, experienced, and qualified investment advisors. Get numerous opinions before taking your own decision in the end. The minimum risk on any investment mentioned in this publication is 100% loss of capital.

Shortly: you will lose all of your money and possibly most of your brain cells if you listen to talking heads on the internet. Especially if they have orange hair and no experience (me).

Timestamps

00:00 Important warning
00:45 Why +$4 copper is the new normal
05:00 The demand for copper
08:00 Above-ground copper inventory
09:03 Potential copper supply issues
13:30 Where are we within the copper cycle?
19:10 Geological inflation for copper production
24:50 More reasons why copper has a lot of potential
30:40 Copper the best metal to play the green revolution?
32:10 Can China crash the copper price?
36:40 Can innovation technology increase copper supply?
40:00 Recycling in the copper market
42:15 What does the world look like at $10/lbs copper?
46:00 Is copper the new oil?
48:00 Why are copper stocks lagging the copper price?
54:30 Christian’s opinion on some copper stocks
01:06:00 Closing thoughts

Was there something wrong with what the guests said? Did I fail to ask an important question? Did I make a mistake in my reporting? Please tell me about it. Criticism and skepticism are highly welcome and help me learn. Thank you.

[ignacioperez]

Great presentation and nice change of pace from the gold silver ad nauseum thesis. I invite you to do one on aluminum...Great stuff

[malekmalek]

Thanks Antonio.
Copper is interesting aswell for the energy transition especially.

[georgeholloway]

Antonio, what is your NPV calculation for Adventus at 4$ copper? Just wondering if you've done a DCF (assuming you must have done, because you're very diligent with your investments, unlike me!).

[pibbz]

You said you took two positions, mind sharing which one? I'm deep into Kodiak and their lovely CEO Claudia :D Also have a stink bid position in Three Valley Copper Corp, with money that I can afford (and expect) to lose.

[simonbarrett]

Very good video. Africa is go to be big for copper in the future that the place to look same very big mine and very cheap

[MrTimtam]

I like copper; I’m looking to invest in the space but I’d like to hear a different story than ‘climate change’ because the ‘greener/cleaner’ world (excluding uranium) completely disregards Energy Return On Investment; EROI. I believe for this very reason we will NOT transition to electric vehicles since they are MORE mineral intensive and truely never offset the carbon produced to make them. I believe this will be reflected in the market in due course. Thus, I’d like to know more about copper demand that is realistic and not just based on the pipe dream of a green energy transition.

What comes to mind is the California proposal some time ago, that every new home built would have to be powered by 100% solar. Of course this was impossible for many reasons but one being that there was not enough annual silver production to go ahead with that plan. This is precisely the reason I avoid companies that sell you a narrative rather than tell you about their deposit or when their deposit solely depends on a narrative that is difficult to measure because it is dependant upon guessing what policies governments around the world will chase - which change every 4 years for most western countries.

The green transition is a classic ‘IF’ not a ‘WHEN.’

[malekmalek]

Ik heb iets van het Vlaams Belang gelezen, dat zij op Europees niveau er in geslaagd zouden zijn om de energietransitie plannen tegen te houden.staat een artikel over op hun site, ben jij van zoiets op de hoogte ? Dit zou toch enorme in overweging moeten genomen worden voor verdere investeringen.

[raghavmandhana]

But what if the world goes into the recession?

[sylvainblomer]

Check the company ZCCM-IH that owns 20% of Kansanshi (owned by First Quantum Minerals) They are looking to do royalties deal for it.