21/10/2021 – Event / Mining / Mines / Money / Investment / IMARC / Gold / Lithium / Copper
Focus on gold price, lithium demand, and China’s appetite for copper
It was gold price, lithium demand and China’s appetite for copper that dominated much of the discussion at Mines & Money Online Connect @ IMARC this week at the virtual event – held from 19–21 October.
Mines & Money Online Connect saw 90 mining companies, 600+ investors and more than 2,000 participants log-on to hear mining executives and analysts discuss the next big thing for savvy investors in 2022.
Time to Strike Gold?
“Frustrating” sums up the 2021 gold price, according to Willem Middelkoop, Founder and Chief Investment Officer of the Commodity Discovery Fund. Mr Middelkoop spruiked gold’s glittering upside during the Mines and Money Gold Outlook Panel Discussion.
The panellists suggested that with the gold price soaring to record highs, a gold correction was inevitable. Historically, gold price is linked to market volatility and the much of new money printed in the United States.
In 2022, panellists expect plenty of market volatility and money printing, with an overinflated US dollar set to weaken in value, and subsequently drive up the price of gold. Through the Commodity Discovery Fund, Middelkoop has studied the gold price in relation to increased money supply over the past decade.
“If you look at the current graph, the gold price needs to move back toward over US$2,000, and it should move toward US$8,000-$10,000 dollars to be in line with money growth. If you look at that statistic, there is so much upside,” said the CIO.
“A doubling of the gold price within 12 months is easily possible,” he added.
The Need for Speed
The US has the need for speed, with car manufacturing adopting electric vehicles (EVs) at an accelerating rate. The rising demand for EVs – which is expected to surge to account for 10 per cent of global sales by 2025, according to Bloomberg New Energy Finance – will require startling quantities of lithium.
The price of lithium hydroxide continued to soar in 2021 and shows no sign of slowing down in 2022. Prices topped US$23,375 per tonne at the time of writing – up from a US$6,300 average per tonne in the September quarter 2020.
During the Mines and Money Battery Metals Session, Piedmont Lithium President and CEO Keith Phillips said the EVs market is fuelling the demand for lithium hydroxide. “I’ve always had the view that the market would speak, and the time would come – and it will,” he remarked.
Mr Phillips said Ford’s Blue Oval City required 125,000 tonnes per year of lithium hydroxide to service its three battery plants, which surpasses the production capacities of all lithium projects currently planned in the United States.
“Tesla has been a leader here, but LG and General Motors are making big commitments. “Everyone is talking about bringing more capacity to the US, which we desperately need, and even if we all succeed, we are still going to be short, and require lots of material from outside the US,” the executive added.
China’s quiet copper rush
Copper was the metal of the hour during the China Commodities Supply and Demand Outlook 2022 Panel at Mines and Money. Companies from Australia’s biggest trading partner are digging for strategic commodities to enhance diversification and survival in an uncertain marketplace.
Gold Mountains General Manager, Maggie Huang, said sourcing and developing copper mines was critical to not only Gold Mountains, but to the Chinese economy. “We see copper as a highly strategic metal for China, we are the largest consumer in the world. We consume half of all output of copper, but produce only 20–25 per cent of what we actually use,” she said.
Ms. Huang pointed out that whilst Australia and Canada represented stable and mature investment destinations in the past, “an investment is an investment”, and Chinese companies are now seeking new opportunities in other mining destinations.
As Africa and South America mature as mining destinations, Ms. Huang said emerging opportunities in Africa and South America could be more profitable and signify a more attractive investment than Australia or Canada.
As Mines & Money Online Connect @ IMARC concludes with positive outlooks on gold, lithium and copper, the mining and resources sector now sets its sights on Australia’s largest mining investment forum Mines & Money @ IMARC https://minesandmoney.com/imarc/ – co-located with the 8th edition of the International Mining and Resources Conference (IMARC) https://imarcglobal.com/ – from 31 January to 2 February 2022 at the Melbourne Showgrounds.