Australia’s Next Commodity Boom Still Includes Copper

I don’t need to tell you Australia is at the tail end of one of the biggest mining booms in history.

It began around 2003. Price for commodities like iron ore, coal and copper, began to rise. The price surge was largely driven by growing economies, like China and other countries.

Yet while demand continues, prices are far from peak levels. It’s why many commentators have called it the end of Australia’s commodity boom.

Copper price set to rise

But it won’t be long before Australia experiences yet another surge in commodity prices. Infrastructure spending and new technology will drive demand for Aussie commodities, in particular, copper.

In their June 2017 copper outlook, National Australia Bank Ltd [ASX:NAB] said copper consumption will continue to be driven by China, into the future.

Copper Consumption Growth - 09-10-17

Source: NAB

China uses copper for their various infrastructure projects and other electrical purposes. But soon, they’ll be using copper for a completely new emerging industry — electric vehicles (EVs).

Rise of electric cars - 9-10-17

Source: Seeking Alpha

China leading the way

Unlike many nations, China doesn’t just want EV’s. They need them.

As more newly rich Chinese flock to urban areas, demand for cars and other goods will grow. But more petrol cars on the road is the last thing China wants. Their cities are heavily polluted, sometimes causing deaths.

It’s why the government is trying to develop EV technology as fast as possible. ‘As a country, China has three fundamental paths it may follow,’ Forbes writes:

First, it can choose to live with a rapidly growing number of ICE powered vehicles on its roads, with all that implies as far as air pollution and energy independence.

Second, the government can restrict the transportation choices of its citizens in an effort to balance environmental concerns.

Or third, the country can embrace EV technologies that enable its citizens to have their cars without jeopardizing air quality in its cities.

China already has the largest automotive market in the world. The 28 million vehicles produced in 2016 is expected to grow to 35 million by 2025. And around one fifth of those will be alternative fuel vehicles such as, EVs and hybrids.

That’s seven million EVs, which contain hundreds of kilos of copper. Take a look at how much copper is needed in various EVs below:

Copper Content By Electric Vehicle

Source: Seeking Alpha

If you don’t want to miss out of Australia’s next commodity boom, check out these top 10 Aussie mining stocks.


Härje Ronngard,

Junior Analyst, Markets & Money

Harje Ronngard is a Junior Analyst at Markets and Money. With an academic background in finance and investments, Harje knows how simple, yet difficult investing can be. He has worked with a range of assets classes, from futures to equities. But he’s found his niche in equity valuation. It’s not good enough to be right on average when it comes to investing. The market is volatile and it only takes one bad day to ruin your portfolio. You don’t want to end up like the six foot man that drowned in the river that was five foot deep on average. It’s why Harje is constantly reminding investors of their downside risk here at Markets and Money. He does so by simply asking just two questions.  What is it worth? And how much does it cost? These two questions alone open up a world of investment opportunities which Harje shares with Markets and Money readers. Right now Harje is focused on managing research and investments over at the Legacy Portfolio. An investment publication designed to significantly grow investor’s wealth over time with deeply undervalued businesses. Harje also contributes his insights in Total Income, headed by income specialist Matt Hibbard. Harje loves cash-rich businesses, so he feels right at home amongst Matt’s high yielding income plays.

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