Copper price to rocket to $40,000 a tonne, says top trader Andurand
When mining company BHP made a bid for rival Anglo American last month, it was seen as a play on the future of copper. The shiny red metal is a crucial component in electric vehicles, solar panels and wind farms, and a deal would give BHP control over Anglo’s lucrative copper mines in Chile and Peru.
Now, one of the world’s best known commodities hedge fund managers tells my colleague Costas Mourselas that the price of copper could almost quadruple to $40,000 a tonne in the next four years.
“We are moving towards a doubling of demand growth for copper due to the electrification of the world,” says Pierre Andurand, chief investment officer of Andurand Capital Management, arguing that supply will struggle to keep up with the voracious demand that comes with a global transition away from fossil fuels.
“I think we could end up to $40,000 per tonne over the next four years or so. I’m not saying it will stay there then; eventually we will get a supply response, but that supply response will take more than five years.”
The mining industry estimates that it typically takes around 15 years to develop a new mine, and Andurand doesn’t think that digging deeper and faster in existing mines will be enough.
Andurand climbed the ranks at Goldman Sachs and then at oil trader Vitol before launching his own fund at the age of 30. His volatile performance has earned him a reputation as something of a comeback kid. And indeed he hasn’t been right on all of his big calls. Last year, his Commodities Discretionary Enhanced fund suffered a 55 per cent loss as bullish oil wagers backfired.
“I think we all lost a lot of money, expecting supply disruption that did not happen,” he said. “You remember that pain.”
But he has since recovered most of those losses. His best-known fund, which runs $1.3bn, is up 83 per cent this year, according to investors. One of the bullish bets that got him there was on soaring copper prices, which are up more than 20 per cent.