China CMOC Says Green Push to Unleash Extraordinary Metal Demand

The world's efforts to mitigate climate change will keep extraordinary metal demand growing, according to China Molybdenum Co., Ltd. (China CMOC).

Copper is set to enter a decade-long bull market, Li Chaochun, vice chairman and chief investment officer of Luoyang, said in an interview, despite the short-term volatility of the copper market caused by potential interest rate hikes and a gradual reduction in quantitative easing measures. "Copper and cobalt are likely to see significant consumption growth over the next five to 10 years as more and more countries develop plans to achieve carbon neutral," he said.

Copper surged to record levels in May, cobalt is climbing and lithium prices are at record highs. Mining companies' inability to keep up with demand and supply for key commodities could be constrained by years of underinvestment, the depletion of easy-to-exploit reserves and concerns about environmental impacts on geopolitical tensions.

"It's hard to find long-term, high-quality resources, and mining companies are more cautious about capital spending after the previous commodity boom gave way to a prolonged downturn," Li said.

Li predicts that the length of the bull market in the copper market will depend on the pace of the clean energy transition. Worries about China's energy crisis and the turmoil in the country's property market, which has disrupted the copper market, are easing.

Li's other ideas include that markets outside China are becoming increasingly important to the industry. China's rapid economic growth has been a key driver of metal consumption for the past 10 to 15 years. That's still important, but don't underestimate demand outside China.

He also believes that the lithium market is very hot, which means that people have a positive attitude towards the industry, two or three years later, this market enthusiasm and price sustainability remains a question mark. China CMOC is also tracking opportunities for the other extraordinary metal demand, including aluminum.

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