EXCLUSIVE: Green Transition Will Drive Copper, Uranium And Lithium Higher, Says Veteran Commodity Analyst

China is no longer building fossil fuel power stations at the rate of two a week, as the world opts for greener energy options.

Still, the metals needed to achieve these goals will surge again, according to Patricia Mohr, commodities expert and a former vice president at Scotiabank.

Mohr told Benzinga’s Melanie Schaffer that the green transition could see prices for certain commodities spike.

Speaking at the recent Prospectors And Developers Association of Canada (PDAC) conference in Toronto, Mohr said she was especially bullish on both copper and uranium.

“In the mining space we think copper is going to do very well — currently trading around $4 a pound, I think in a couple of years it will move above $5 a pound, which will be quite a profitable level,” she said. “We need to see that level because we need to see investment in some new mines established around the world to meet the decarbonization goals the world now has.”

Copper is used heavily in the production of electricity — whether that be in fossil fuel-guzzling power stations or wind and solar farms. The copper is used in turbines that convert rotational energy into electric energy. In fact, more copper is used in wind and solar energy production than in traditional fossil fuel stations.

It’s akin to when China’s tiger economy was growing at double-digit percentages every year throughout the 1990s. This required expansion across power and housing. Thus, the price of copper and many other industrial metals reached record highs during the commodity super-cycle well into the early 2010s.

“With copper, there have been a lot of operational problems,” Mohr said

These have included the shutdown of First Quantum‘s FQVLF Cobre mine in Panama, which was ordered by the Panama government late last year after public protests over environmental concerns

There have also been production issues with other mining groups, such as Anglo American Plc NGLOY, resulting in lower copper output forecasts for the year.

“We’re not seeing a lot of new investment — there is some expansion in capacity, but not as much as the market had expected six months ago. So the market is going to jump in the next year and a half and it will prove to be a very good investment.”

The United States Copper Index Fund CPER, an ETF that tracks the price of copper, is up nearly 5% so far in 2024, while the Global X Copper Miners ETF COPX, which holds the top copper mining stocks, is up 8.8%.

Also Read: Copper Stocks Rally As Market Tightness Reaches Historic Levels: Analysts See Major Scarcity By 2025

Going Nuclear On Uranium

Global environmental targets are igniting renewed interest in the nuclear option.

Following the Fukushima disaster in Japan in 2011, when an earthquake caused the release of nuclear contaminants from a power station into the surrounding environment, some countries decided to cut their dependence on nuclear power.

Germany decided to go nuclear-free, but many countries, given the current supply risks of other fuels such as oil and gas, have revisited their nuclear policies.

“We’re bullish on uranium — an energy source that emits almost no greenhouse gases. It’s a very clean energy source. Governments around the world are beginning to show interest in nuclear power once more — including in Canada” said Mohr.

Mohr explained that uranium has been on something of a run. After hitting lows around $15 a pound in 2016, the price is currently $85, having hit more than $100 in January.

“I wouldn’t be surprised to see it reach its previous peak of $140 (hit in May 2007) — I think it’s going to turn out to be a good investment.”

This week the Global X Uranium ETF URA, an exchange-traded fund that tracks global uranium miners, is flat in 2024.

Lithium Driven Lower

While lithium prices have tanked in the past year as demand for electric vehicles appears to have hit a plateau, Mohr is now becoming more bullish, given the lower entry price.

“I do think EVs are the future, but in the U.S. it’s coming on more slowly. In the U.S. they’re not concerned about the global outlook for oil because they are the biggest oil producer,” she said.

She added: “Lithium took quite a tumble last year so I think some investors will come back in to take advantage of low valuations and the price will come back slowly.”

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