ASX 200 | A B C D E F G H I J L M N O P Q R S T U V W X
TO MAKE THE WORLD SMARTER, HAPPIER, AND RICHER.
Founded in 1993 by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show, and premium investing services.
Why are investors going mad for copper?
You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More
Much of the ASX water cooler talk so far this week has been dominated by copper.
Yesterday, we learned that the mining giant BHP Group Ltd (ASX: BHP) had put in a takeover bid for OZ Minerals Limited (ASX: OZL).
BHP put forward an offer of $25 per share in cash for the company. This was swiftly rejected on valuation grounds.
OZ Minerals is one of the largest copper miners listed on the ASX. It also produces other metals from its mines, including gold and silver.
The fact that BHP is eyeing it off is an interesting insight into the red metal’s appeal and why companies like BHP are desperate to increase their exposure to it.
Copper is an elemental metal. It’s extremely useful for its electrical and heat conductivity and is relatively abundant. A number of metals efficiently conduct electricity, including gold and silver. But copper is in the sweet spot in terms of cost.
It is a lot cheaper to make electrical wiring out of copper than say, gold or silver. And copper is a far better conductor of electricity than other cheaper base metals like steel or aluminium. As such, almost every electronic device in the world uses this metal in some shape or form.
According to reporting in the Australian Financial Review (AFR) , the global investment bank Goldman Sachs is bullish on copper.
Goldman is predicting that just like oil has been in the past, “copper will be at the centre of global competition between Western countries and the emerging autocratic bloc”, as global demand doubles by 2050.
Traditional cars and other road vehicles use very little copper compared to other materials like steel and aluminium.
But for next-generation vehicles that are powered by electric motors driven by rechargeable batteries, rather than burning petrol or diesel, copper is far more applicable. According to the AFR, electric vehicles require four to six times the amount of copper found in traditional internal combustion vehicles.
Not only that, but copper is also a vital ingredient in renewable energy infrastructure like wind farms and solar plants. So this is a metal that is going to play a massive role in the transition to a carbon-free world. That might be why Goldman Sachs is calling copper the “new oil”.
Goldman is predicting a global supply shortage in copper in the years ahead, which will boost the prices that the metal can command.
So it’s perhaps no wonder that BHP is trying to shore up its own operations by buying out OZ Minerals. But perhaps investors should get used to hearing about this red metal. It will certainly be hard to escape if copper does indeed become the new oil.
Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
Shareholders are set to vote on the proposal later this month.
Demand for lithium is booming alongside rocketing growth in EV production, sending the price of the battery critical metal up…
Opinion is mixed on the outlook for the commodity.
It’s been tricky for BHP shareholders recently. Can things turnaround?
Demand for lithium continues to see high realised spot prices, with a positive flow-on effect to ASX lithium stocks.
What's going on with the minerals producer’s stock? We take a closer look.
Ragusa Minerals is getting ready for its maiden drilling program at its NT Lithium Project.
Let's see what the consensus amongst analyst is.
In this FREE STOCK REPORT, Scott Phillips, and his team at Motley Fool’s Share Advisor have released a special free report, detailing 5 ASX stocks that they think could be fantastic stocks to own as investors prepare for their retirement.
Sign Up for Take Stock Investment news, stock ideas, and more, straight to your inbox.
Get Started Investing You can do it. Learn about investing with our Investing Education hub.
Win at Retirement Our latest articles and strategies for the post-work life you want.
Listen to Our Podcast Hear our experts take on shares, the market & how to invest.
Join Our Premium Community Join our flagship membership service, Share Advisor.
To make the world Smarter, Happier, And Richer
Founded in 1993 by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show and premium investing services. The Motley Fool launched its Australian presence in 2011, and since then has grown to reach over 1 million Australians.
Read more about us >
This Service provides only general, and not personalised financial advice, and has not taken your personal circumstances into account. The Motley Fool Australia operates under AFSL 400691. For more information please see our Financial Services Guide. Please remember that investments can go up and down. Past performance is not necessarily indicative of future returns. The Motley Fool Australia does not guarantee the performance of, or returns on any investment.
© 2010 - 2021 The Motley Fool Australia Pty Ltd. All rights reserved.
Australian Financial Services Licence (AFSL): 400691
The Motley Fool Australia, PO Box 104, Isle of Capri, Qld 4217
Contact Details: Phone: (03) 8592 4841 Email: [email protected] Our friendly customer service team will happily get back to you as soon as they can.