Pressure is mounting on miners as supply of critical metals needed for clean energy technology is growing increasingly tight, Perennial Partners’ Samuel Berridge has cautioned.

Speaking on Reach Markets’ fortnightly The Insider: Meet the Fund Manager webcast, Mr Berridge noted demand for certain metals like lithium and copper has surged in recent years.

This momentum is unlikely to diminish, he added, as the amount of copper required to convert the world’s existing fleet of 1.4 billion vehicles to electric cars alone will require a 200% increase in annual production.

Providing sufficient charging infrastructure and converting other energy-intensive sectors outside of transport will require even more of these metals, which Mr Berridge said “ebb between deficit and supply to the tune of about 1% to 2% a year”.

“To find another 200% over the next 30 years or so is going to be a massive challenge,” he said.

“All of that flows back to the mines themselves, and that’s where the ultimate bottleneck for decarbonisation is.” 

Mr Berridge cited research from Stanford University that suggested the cost of this transition will cost a total of US$73 trillion over the next 30 years, and remain a major economic driver particularly within commodities markets.

Numbers published by mining company Glencore suggest global supply will need to grow to double what it was during the last commodities supercycle, which was driven by China’s rapid industrialisation through the early 2000s to mid-2010s.

“I can’t see how this sort of supply response is going to be achieved, which means metal markets should trend towards deficits for the foreseeable future, and that means higher metal prices,” Mr Berridge said.

Sources:

• South China Morning Post, Commodities super-cycle is ‘taking a break’
• Reach Markets, The Insider: Meet The Fund Manager Samuel Berridge