The newest entry within the style is by Julian Kettle, senior VP and vice chair of Woodmac’s metals and mining enterprise (learn it here). Kettle’s first exhibit in Supercycle demand. Are we there but? could be fairly dispiriting should you’re within the bull camp. (A bull? Me?)
Bar cobalt and nickel, Woodmac’s demand development projections for this cycle are noticeably decrease than in the course of the five-year interval between 2003 and 2007 when the nice sucking sound from the East was getting louder and louder.
We’ll get there EVentually
Even salt du jour, lithium, goes to be much less boomy over the subsequent 5 years than the early 2000s, when Tesla wasn’t even a twinkle in Musk’s eye, Nokia was the cell phone firm of the longer term and Volkswagen livestreaming a battery day would’ve appeared as foolish as, , Volkswagen livestreaming a battery day.
As a lot enjoyable as it’s to talk about muskmobiles and their effect on mining, it’s value remembering that EV batteries solely overtook cellphones as the number one use of cobalt a few years in the past, and as Kettle factors out chrome steel will stay the highest nickel software by means of this decade.
These battery metals (sorry lead-zinc, we simply don’t consider you in that approach anymore) are additionally flattered in proportion phrases as a result of small dimension of their markets.
Let the tonnes do the speaking
Share adjustments solely get you up to now – mining is an altogether totally different beast than 18 years in the past and Woodmac’s chart beneath reveals in absolute development phrases the image is decidedly rosier, however other than the battery metals not precisely capturing the lights out.

And the chart on the left in exhibit two (higher not look Pilbara; shut your eyes Pará) ought to give even probably the most ardent supporters of the supercycle story trigger for pause.
Costs have been scorching throughout metals and minerals, however iron ore was by far the most profitable commodity final time round, accounting for two-thirds of ebitda for the massive 5 diversifieds in 2011, up from 24% in 2007.
Ore wars
Demand for nickel rising at a 200kt clip, lithium at 80kt a yr and cobalt at 10kt received’t precisely set hearts racing in Melbourne, London, Rio or Baar (extra so in Jakarta and Kinshasa).
Not when in comparison with greater than 50 million further seaborne tonnes per yr and a benchmark worth going from $13.82 in 2003 (Japan-Australia-Brazil annual benchmark) to $191.70 a tonne (62% Fe Fines CIF Tianjin) seven years later.
MINING.COM’s hottest article of 2012 was headlined Forget gold, IRON ORE is the story of the decade which helps clarify why lots of of thousands and thousands have been allotted to review projects like Outer Harbour to the dismay of natator depressus followers in all places.
Outer Harbour wasn’t the one outre venture both. Through the go-go days, money from the iron cow was ploughed into every kind of mega-projects with no railway line too long to consider developing, ship too big to commission (warning: hyperlink comprises profanity) or overburden too massive to haul away.
Animal spirits evaporated
Years of shareholder castigation have left a much chastened business, and regardless of a return to mega-profits on the high tier, focus stays on dividends and capital self-discipline, not gearing up for development.
Even half-brainer choices like BHP’s Jansen in Saskatchewan and Rio’s Jadar in Serbia (Djokovic’s double fault notwithstanding, it’s lithium, duh!) seem to agonise boards.
Does it actually take Brazil granular at $800 and ballistic lithium costs to clear funding hurdles? Should copper go to $30,000 earlier than animal spirits are launched?
Judging by this chart by Fitch Options, the reply – even after a wholesome $12 billion upward adjustment from earlier estimates – seems to be sure.

On the peak in 2013, the highest 25 largest mining firms had outlays of $117 billion; the second yr in triple digits. Subsequent yr it might rise past $70 billion.
All of the fields are brown and the sky is gray
Through the Beijing increase, exploration budgets (non-ferrous, however actually who drills for iron?) have been significantly bigger than they’re right this moment regardless of metallic costs at related ranges.
Greenfield exploration was a factor – as late as 2013 half of the top ten largest copper expansion projects were greenfield. Early-stage exploration budgets in 2020 fell to their lowest on a proportion foundation, and after a slight uptick this yr nonetheless accounts for under 26% of budgets.

Neither did boards shrink from frontier markets. Now they’re discovering that what have been thought-about South American secure bets are degrading sooner than ore overages within the Andes. Trial balloons about coming into Africa are discovered to be made from lead and advancing a venture in US jurisdictions stays a life sentence.
Copper capex chill
If iron ore was doing the heavy lifting within the 2000s and early 2010s, it is going to be up to copper to supersize this cycle.
However copper’s high tier hasn’t precisely gone capex loopy and when there may be spending it’s principally to maintain manufacturing regular or fulfill environmental pledges – one other day, another desalination plant.

Solely a fraction of the 28,000 mining trucks in operation globally are zero emissions. Lithium-ion batteries aren’t getting cheaper anymore and even with sweet tax incentives like Canada’s, simply to transform what you have already got will take away {dollars} from growth plans.
Pricing to scare
In a current report headlined: Copper: Pricing to shortage, Goldman Sachs calls copper probably the most mispriced commodity. Shortage is a fairly sturdy phrase to make use of in any report about commodities.
The funding financial institution has recapitulated its bullish forecast for copper to common $11,875 a tonne (slightly below $5.40 per pound) subsequent yr and step good points to $15,000 ($6.80) in 2025.
However Goldman is a lonely voice.
A month-to-month ballot conducted by FocusEconomics launched Thursday reveals huge disparities in forecast costs by the funding banks, brokers, economists and governments collected December 1 – 6.
Amongst funding banks, the bottom forecast among the many greater than 30 individuals for the common worth subsequent yr is by BMO Capital Markets, which predicts copper to retreat to the $7,875 ($3.60) stage (and $6,625 in 2023, ouch!).
RBC and Société Générale are additionally firmly in bear territory with forecasts round $8,250 in 2022 whereas TD Securities, Capital Economics and Citigroup barely see copper scaling $9,000 subsequent yr. The consensus forecast for 2022 is a median of simply over $8,900, sliding to $8,480 in 2023.
All blame a slowing China, notably its property sector, for the bearishness.
We’ll at all times have Qingdao
The final chart is six years old and from the World Financial institution Commodity Outlook for 2016 (sadly not accessible for public viewing anymore) which fairly belatedly forecasted a extreme downturn in Chinese language commodity consumption.
China’s financial development price might have slowed to 30-year lows, however in absolute phrases, the nation’s financial system will add the equal of Turkey’s GDP this yr, two South Africa’s value of financial exercise, three Philippines, 4 New Zealands, and at least 5 nominal Hungarys.
When you’re speaking tonnes of metallic fairly than developments that ought to be unalloyed excellent news. However this chart, 2021 to 2035 can’t however fall in need of 2000 to 2014.
