Commodities in “perfect storm”, according to the ERG, as the crisis begins a super cycle
Sobotka said a commodity super cycle has now begun and will continue for the next 30 years, predicting a 20% rise in copper prices by the end of 2022.
The Luxembourg private company ERG is a global supplier of copper and cobalt. It also supplies alumina and iron ore and is the only high quality aluminum producer in Kazakhstan.
Transition “cannot be stopped”
Sobokta believes a resurgence in fossil fuels is temporary and that the transition to a low-carbon economy “cannot be stopped,” which will require projecting $50 trillion over the next three decades.
“200 to 300 billion dollars of investment per year will be necessary for the mining industry to meet the demand for energy transition,” he said, much of it being invested in the extraction of copper, nickel , cobalt and other metals.
In an environment of high prices and supply chain pressures, Sobokta expects companies and countries to stockpile strategic raw materials, including oil, copper, cobalt and other metals.
“If you experience small supply disruptions, you’re going to see big price swings,” Sobokta said, adding that he expects to see an impact in the second half of 2022.
Major end-users such as the auto industry are already trying to strike long-term purchase agreements to buy metals such as lithium and cobalt at current market prices, he said.
“It shows you how difficult it is to get your hands on long-term material – and in particular material that is clean from an ESG (environmental, social and governance) point of view,” he said. he adds.
(By Divya Chowdhury and Savio Shetty; Editing by Alexander Smith)