Growing talk of a new supercycle for mining is encouraging, but a totally different kind of supercycle may be more important for mining supply firms.
The supercycle of the first years of our new millennium was a sustained period of rising commodity prices, supported by population growth and infrastructure expansion in emerging markets. The broader economic boom collapsed with the global financial crisis of 2007–2008.
The mining sector saw an orgy of investment and acquisitions that left major players over-extended and created excess capacity that held prices down for years. The past decade was nothing like a slump. Global output of metals continued to rise, only prices dropped. It is an oddity of GNP accounting that increased production can appear as lower GNP when prices drop.
Now, growing demand and rising prices are driving talk of another supercycle. The World Bank reports that tight supply should push up prices for base metals, including lead, nickel and zinc. Chinese demand may have slowed, but India and Africa are growing. The Trump bump has become a Trump slump as “ChiMerica” stages its battle over trade, but longer-term economic indicators are looking solid.
Supercycle or not, this is good news for suppliers, as is the rapidly building transformation of the global energy system. There will be enormous new investment in the so-called “energy metals,” including aluminum, cobalt, copper, lead, lithium, nickel, manganese, platinum group metals, silver, titanium, zinc, and rare earths as the world moves away from fossil fuels
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