Copper is the bellwether metal for the global economy. Whither the copper market, so to the rest of the world, or so the received wisdom goes.
On that score, it might be argued that the copper price is giving something of a mixed signal at the moment, given that at the current price of roughly US$6440 per tonne its roughly flat on where it was a year ago.
In between now and then there have been some fluctuations, to be sure, as sentiment about the outlook for the global economy has waxed and waned.
But in spite of all the sound and fury from Donald Trump on tariffs and trade, the global economy continues to chart a relatively predictable course, with overall global growth set to slow somewhat this year, even though the two major stalwarts, the US and China, continue to do well.
Having said that, much depends on how exactly you frame your narrative. Growth is still significant in China and the US, but in both countries growth is slowing. Indeed, in China, the growth rate is at a 30 year low, although new lows were always inevitable at some point given the stellar rates China has turned in over the past couple of decades.
On the other hand, if a trade deal between the US and China does get done, it ought to provide a significant short-term kicker to the global economic picture, and will certainly have a rub-off effect on equities, and in particular the mining stocks.
Overall then, in the immediate term, there are grounds for optimism.
Indeed, this week Antofagasta’s (LON:ANTO) chief executive Ivan Arriagada went on record with the view that copper is likely “to move physically into shortage” either at the end of this year, or next.
But it’s also becoming increasingly clear that in case of copper, there’s another factor that needs to be taken into account: its increasing use in the technologies of the future.
Consulting firm BRSIA estimates that smart-home connectivity systems like Amazon’s Alexa and Google’s Nest will add an additional 1.5mln tonnes of copper to global annual consumption figures by 2030.
Electric vehicles, too, are likely to pull in increased amounts of copper, given that they use around twice as much as vehicles powered by internal combustion engines do. So far, attempts to substitute copper anodes with a cheaper aluminium version have failed.
Meanwhile, broker SP Angel highlights research that shows that 55% of copper consumption will be accounted for b energy transmission and distribution by 2040, with solar panels and wind turbines playing a key role.
The latest US figures show that in 2018 renewable energy accounted for just over 17% of supply, with the growth trajectory firmly on the up.
Solar went from a virtual standing start ten years ago to generating 100mln megawatt hours of power in the US in 2018, while wind rose from around 50mln to more than 250mln.
In this context, copper can be viewed not only as a bellwether metal for the current state of the global economy, but also as an indicator of the outlook for a more sustainable future. It might be a bit of a stretch for the anti-mining lobby, but in that sense it truly is a green metal.
The correlation on the ground, of course, is a scramble for copper projects that offer significant scale. The Cascabel project owned by Solgold (LON:SOLG) is one. Asiamet’s (LON:ARS) project in Indonesia is another.
And there could be real upside ahead for explorers and developers operating in Mongolia, like Xanadu Mines (ASX:XAM) and Kincora Copper (CVE:KCC), and in the well known mining districts of British Columbia, like Dunnedin Ventures (CVE:DVI) and Skeena Resources (CVE:SKE).
Solgold’s shares are up by around 40% over the past 12 months, as some of the world’s biggest miners have shown themselves to be more than willing to write huge checks to get a piece of the action.
But the market hasn’t really woken up to the potential on offer from the next generation of explorers and developers. It can only be a matter of time.