Positioning for Lithium & Copper Gains in 2H 2023

I hope everyone is making the most of their summer. The junior resource market is filled with apathy, boredom, and 52-week lows in terms of share prices and volume. 

Despite that, the Junior Resource Monthly portfolio has held up well, delivering a quadruple-digit gain (that’s going higher), a couple of triple-digit winners (also going higher), and a well-rounded group of companies that provide excellent exposure to a resurging precious metals, uranium, lithium, and copper market that I anticipate will accelerate into the end of the year. 

I wanted to share an excerpt from the most recent issue of Junior Resource Monthly that I hope you’ll find insightful. 

Positioning for Lithium & Copper Gains in 2H 2023

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Lithium & Copper Tailwinds

Master storyteller and resource legend Robert Friedland recently described the coming copper shortage as “heading for a train wreck.” Adding, “My fear is that when push finally comes to shove, copper can go up 10 times.”

While I agree with Mr. Friedland that a copper shortage in the next several years is in the cards and that I see copper heading much higher, I don’t need it to go up 10 times to capitalize off of it. 

Give me $7/lb. copper (a double from today’s prices) and I’ll be one happy camper with the new copper exposure.

The Biden administration’s support to get the United States back on stable footing as it relates to the critical metals supply chain has similar implications for copper as it does lithium. The two go hand-in-hand and the obstacles in bringing supply online quickly and cheaply are similar.

Long lead times for discoveries, longer lead times to permit and build a mine, coupled with accelerating demand, and you have the perfect storm.

Those of you familiar with my work know I don’t much care for either of our two major political parties but credit where credit is due, the Inflation Reduction Act (IRA) is incentivizing the North American clean energy transition in very real ways.

If lithium was the new gasoline a few years back (as Goldman dubbed it), then copper is the new lithium.

Benchmark Mineral Intelligence (the smartest guys and gals in the critical metals research room) estimates that $51 billion needs to be invested in the lithium sector — and $514 billion across the entire battery supply chain — to meet future demand with lithium being the major bottleneck (y’all didn’t think I pulled my Patriot (TSX-V: PMET)(OTC: PMETF) $50 minimum price target out of thin air did you?).

More lithium will be needed in 2030 than was mined between 2015 and 2022 according to Benchmark’s Lithium Forecast.

More lithium will be needed in 2030 than was mined between 2015 and 2022 according to Benchmark’s Lithium Forecast.

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And think about this: Over 700Mt of copper is needed in the next 22 years to maintain 3% GDP growth without the energy transition. Wind and solar are 7x and 37x more copper intensive than conventional energy according to our good friends at Hannan Metals (TSX-V: HAN)(OTC: HANNF).

The Department of Industry, Science, Energy and Resources of the Government of Australia (DISER) estimates that by 2030, 10% of refined copper consumption will be accounted for by use in EVs, batteries, and charging equipment.

So just like lithium, there’s a perfect storm brewing in the copper space as well with geopolitical uncertainty covering large swaths of the globe, particularly Peru and Chile.

Gerardo Del Real

Gerardo Del Real
Editor, Daily Profit Cycle