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Commodity Super-Cycle and Decline

The China commodities super-cycle is over. Will there be another boom? – by Leslie Hook, Joe Leahy and Wenjie Ding (Australian Financial Review – January 16, 2025)

https://www.afr.com/

China’s massive industrialisation and urbanisation drove a huge commodities boom that has run its course, but some executives are hopeful it will be replaced.

Waking from a nap at his desk, Xiao, a steel trader from Wuhan in central China, reflects on how, at the end of one of the greatest booms in recent economic history, he is a lucky survivor.

About half of his competitors in this gritty office park, built near the site of China’s first ironworks, have gone bust during the country’s three-year-long property crisis. The park itself is overshadowed by the enormous concrete skeleton of an unfinished real estate project.

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Vince Beiser on the Race for the Resources That Will Shape the Future – by Catherine Putz (The Diplomat – November 18, 2024)

https://thediplomat.com/

“The energy transition from fossil fuels to renewables is a crucial part of the cure for climate change. But it’s a cure with brutal side effects.”

The world, journalist Vince Beiser says, is moving into the “Electro-Digital Age” and at the heart of this new era is a set of ancient, naturally occurring minerals: metals. The critical metals necessary to run the modern world and, importantly, required to power the energy transition away from fossil fuels also produce extraordinary consequences for humanity and the planet.

In “Power Metal: The Race for the Resources That Will Shape the Future,” Beiser charts a court across the world to understand how these metals are moved from the earth to our technology, and the competition that has arisen around them.

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Investors With $11 Trillion Back Plan to Reform Mining Industry – by Alastair Marsh (Bloomberg News – November 22, 2023)

https://www.bnnbloomberg.ca/

(Bloomberg) — Some of the world’s biggest investors are throwing their weight behind a plan to reform the mining industry so it can safely meet the growing demand for minerals and metals needed for the green transition.

Investors overseeing a combined $11 trillion, including California State Teachers’ Retirement System and Legal & General Investment Management, are among the first to back the Global Investor Commission on Mining 2030, according to a statement on Wednesday.

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The Age of Big Shovels – by Daniel Yergin (Project Syndicate.org – September 11, 2023)

https://www.project-syndicate.org/

The IMF recently warned that the pursuit of net-zero emissions by 2050 will “spur unprecedented demand for some of the most crucial minerals,” leading to “soaring costs” that could “derail or delay the energy transition.” The rising crescendo of alarm is justified: “crucial minerals” loom as the main bottleneck to decarbonization.

WASHINGTON, DC – Will a shortage of minerals short-circuit the clean-energy transition? National governments – including the United States, Japan, Britain, and Canada – the European Union, and international organizations such as the World Bank, the International Monetary Fund, and the International Energy Agency are raising the alarm.

As the IMF puts it, the pursuit of net-zero emissions by 2050 will “spur unprecedented demand for some of the most crucial metals,” leading to “soaring costs” that could “derail or delay the energy transition itself.”

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China’s demand for oil and copper is ‘booming,’ says Goldman Sachs – by Lee Ying Shan (CNBC.com – October 1, 2023)

https://www.cnbc.com/

China’s demand for many major commodities has been growing at “robust rates,” Goldman Sachs said in a recent note. The investment bank observed that China’s demand for copper has risen 8% year on year, while appetite for iron ore and oil are up by 7% and 6%, respectively, all beating Goldman’s full-year expectations.

“This strength in demand has largely been tied to a combination of strong growth from the green economy, grid and property completions,” the Goldman report observed.

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Beaver Creek: Wide disconnect between equities and commodity prices offers buying opportunity – by Henry Lazenby (Northern Miner – September 14, 2023)

https://www.northernminer.com/

The discrepancy between mining company valuations and commodity prices is at its worst levels in decades, the Precious Metals Summit in Colorado heard this week.

“This is probably the worst disconnect I’ve seen in over 20 years,” Haytham Hodaly, senior vice-president for corporate development for streaming pioneer Wheaton Precious Metals (TSX: WPM; NYSE: WPM), told the conference.

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It’s Getting Harder to Find Mining Engineers a Green World Needs – by Tiffany Tsoi and Mark Burton (Bloomberg News – September 1, 2023)

https://www.bnnbloomberg.ca/

(Bloomberg) — Digging up the metals that go into power grids and electric cars is crucial to the energy transition. While the mining industry has plenty of reserves to tap, it faces a worrying shortage of young workers needed to get materials out of the ground.

In regions like Canada and the US, enrollment or graduation from university courses related to mining engineering slipped in recent years. The dilemma adds to the challenges miners face as they scramble to boost output of everything from copper and nickel to cobalt and lithium, just as many nations view supplies as a matter of national security and users rush to secure metal.

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Xi, Putin and other leaders locked in discussions over an expansion of the BRICS economic bloc – by Gerald Imray (ABC News/Associated Press – August 23, 2023)

https://abcnews.go.com/

The leaders of Brazil, Russia, India, China and South Africa have held closed-door discussions on the possible expansion of their BRICS economic bloc

JOHANNESBURG — The leaders of Brazil, Russia, India, China and South Africa held closed-door discussions Wednesday on the possible expansion of their BRICS economic bloc, a move they’ve framed as a way to amplify the voice of developing nations, but which also serves the geopolitical interests of Beijing and Moscow.

A decision on whether to accept new members had been expected late Wednesday, the second day of a three-day BRICS summit in Johannesburg. But officials said that was looking unlikely and a declaration might be made on Thursday.

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Commodity investing the antidote to the Age of Scarcity – by James Cooper (Northern Miner – August 18, 2023)

https://www.northernminer.com/

Broken supply chains, geopolitical tensions, war, inflation, rising energy costs, food crisis, droughts, famine, depleting mines. Welcome to the 2020s! The age of abundance is dead. The patterns defining this decade suggest more volatility is on the way, especially in the things that matter most — food, energy and shelter.

It’s why investors should be focusing on commodities. A perfect storm of tight supply that spans minerals, oil, gas, food and water is approaching. The modern world has been spoiled with years of cheap and plentiful supply. But that’s set to change.

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Commodity crash signals disinflation is taking hold for now – by Carolynn Look and Enda Curran (Bloomberg News – May 31, 2023)

https://www.bnnbloomberg.ca/

From copper to wheat to natural gas, the cost of some of the world’s most important products is crashing, bringing long-awaited relief for consumers that were stung by last year’s soaring prices.

The commodity crunch unleashed by Russia’s invasion of Ukraine has taken a sharp reversal, with a Bloomberg gauge dropping more than 10% since the start of the year to the lowest since 2021. Driving the disinflationary trend are a world economy flirting with recession, Europe’s industrial slump and China’s weaker-than-expected emergence from Covid Zero policies.

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Metals are the new oil — with all the geopolitical and environmental complications – by Daniel F. Runde (The Hill – February 11, 2023)

https://thehill.com/

For good or for ill, metals are the new oil. We need more “rare earths” and “everyday earths” to build the technologies of the future and make real a carbon transition. The geopolitics around mines, minerals, and the processing of metals are heating up. For that reason, the U.S. needs a more sophisticated strategy to ensure that the U.S. and our allies have access to mines and minerals.

The amount of minerals needed for a carbon transition will require a vast expansion of mining and the processing of minerals. For example, given current technologies and techniques, we will need to increase the production of cobalt and lithium by 40 times for the electric batteries needed to move from internal combustion engines to electric vehicles.

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Investors Face Growing Commodities Risk Lurking in ESG Funds – by Alastair Marsh (Bloomberg News – February 12, 2023)

https://www.bnnbloomberg.ca/

(Bloomberg) — The dark side of ESG investing has the potential to undermine a whole generation of clean-tech strategies.

Adam Matthews, chief responsible investment officer at the Church of England Pensions Board, said the risks posed to the renewables boom via the mining industry aren’t getting nearly enough attention. The upshot, according to the 47-year-old, is that portfolios intended to uphold environmental, social or good governance principles may end up being exposed to human-rights abuses and environmental damage via supply chains.

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Column: Analysts wary of base metals after China recovery rally – by Andy Home (Reuters – February 1, 2023)

https://www.reuters.com/

LONDON, Feb 1 (Reuters) – Base metals have enjoyed a strong start to the year, the London Metal Exchange (LME) index rising by 9.4% over the course of January on high hopes for China’s post-COVID reopening.

However, analysts are cautious that China’s recovery may not live up to bullish expectations and that prices have got ahead of themselves, judging by the latest Reuters base metals poll.

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Mega Miners Are Hunting for Deals After Decade on the Sidelines – by Thomas Biesheuvel, Dinesh Nair and Jack Farchy (Bloomberg News – January 17, 2023)

https://www.bnnbloomberg.ca/

(Bloomberg) — In the rush of the 2000s commodities boom, the world’s biggest miners earned a reputation as swashbuckling dealmakers, taking on rivals in an onslaught of hostile offers, massive mergers and vicious bidding wars.

Then it all fell apart. A series of disastrous transactions meant balance sheets got shredded, bosses got fired and investors were furious. And so, for the past decade, miners have focused on mining and the mega deals mostly dried up. But now their penitence is over.

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The commodity supercycle is already crashing, blunting Canada’s growth and bruising the TSX – by Tim Kiladze and Niall McGee (Globe and Mail – July 22, 2022)

https://www.theglobeandmail.com/

A sharp reversal in commodity prices – hitting everything from copper, to crude oil, to wheat – is sapping investor enthusiasm for the resource sector and dismantling predictions of a supercycle that would immediately reshape the global economy.

As in many speculative booms, rising interest rates are largely to blame for the pullback. But investors are equally culpable, after they fell for age-old commodity price hype – no matter how many times they’ve already been burned.

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