Right now, there’s trouble brewing for one of the world’s most important commodities…
It’s not only crucial for global economies…
But without it, there’s no green energy transition.
A supply shock may heading its way, which could cause a price rally.
Let me explain…
The America’s and metals…
South and Central America house many key metals such as iron ore, copper, nickel, silver, gold etc…
Recently, there have been major concerns, which could hurt the supply of one the world’s most important commodities…
Copper!
At the end of last month, producer First Quantum Minerals dropped almost 30% as its Cobre Panamá copper mine fell under the weight of public scrutiny in Panama.
After weeks of violent protests, the government backed out of its contract commitments to the producer.
The company’s future now hinges on a public referendum, which doesn’t look too positive.
Cobre Panamá is a major contributor to the nation’s GDP, but this single operation also supplies around 1.5% of global copper supply.
Doesn’t sound like much, but it’s actually a lot.
But it’s still a drop in the ocean compared to Chile…
Back in 2022, Chile introduced a tax reform bill that raised copper mining royalties on companies that produce more than 50,000 tonnes a year.
It increased revenue taxes on the largest mining producers.
And the country set the constitutional groundwork that allows for the re-emergence of nationalisation of the country’s copper industry.
Ultimately, the political landscape in Chile places even greater threats to the future supply of this important metal.
Chile feeds an astounding 20% of the global supply chain…
According to the US Geological Survey, it also holds the world’s LARGEST untapped reserves – which is important for future supply.
But unlocking those reserves needs a supportive government.
According to a recent Reuters report, the world’s largest copper producer – Codelco – sits on the edge of insolvency thanks to rising debt and missed output across its major operations in Chile.
As the most important region for copper mining, development and exploration…this disruption in supply would be enormously bullish for copper prices.
It just might be a great opportunity to pick up copper producers whose shares have fallen this year.
PS. As part of my South African Investor service, I reveal my top five scarce commodity stocks I believe are set to profit in the coming years as the green revolution takes place. You can get a copy free when you take a 30 day trial.
Not a subscriber to Money Morning?
You can get free daily recommendations like these with Money Morning eletter. Just sign up here.
