Because at some point, even The USA under Biden is going to notice China’s Achilles’ Heel and do something about it. China may want to buy all the raw materials in the world, (with palladium in the post below a prime example), but there’s only one it truly needs that it doesn’t have. Its name is copper, the one metal China doesn’t have much of to mine inside its own borders and, by no coincidence, the one it most covets when buying up mines and projects around the world. Yes for sure gold mines are nice to have and will come into their own over China’s longer term, then zinc and tin and others are also clearly interesting, but China has reasonable internal production of most other metals and, in effect, only needs to top up on the world markets. But copper is different, that’s the one China needs now and in very large quantities in order to fuel its growth motor. Copper is one of the vital ingredients of its infrastructure plans and is one of the key targets of its Belt+Road strategy, as the most cursory look around the world will tell you. China isn’t just buying all the produced concentrates and blister, it’s also moving as quickly as possible to secure assets in any copper-rich region willing to entertain them, Asia, Africa and LatAm. For those of you with a sense of history, the phrase “workers’ control of the means of production” will resonate at this point.
Roughly speaking, China is now 50% of the world demand for copper and while we in the mining world are used to that stat, it’s still truly mind-boggling if you step back and think about it. Therefore, the assumption that “China controls the market” is corollary and in many respects is true, because it’s difficult to see much competition in this price chart at the moment:
If The USA and other democracies are serious about tackling their growing “China Problem” they need to use their most efficient weapon and, with fears that Omicron will cause another deflationary pulse now diminishing, it’s time for Captain Capitalism to do its thing. That’s copper in 2022, esteemed readership of IKN, we’re about to enter the year when the rest of the world wakes up and realizes copper is not just the world’s most important non-ferrous metal, it’s now also the world’s most important strategic metal. That means there’s going to be an awful lot of money to be made from its market, because demand will become as political as it is industrial.
Be long copper in 2022.