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On the money

Copper shares could be a goldmine

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Is copper set to become the “new oil”, a strategically important raw material like “black gold” in earlier decades? That’s the big question in the City and on Wall Street, says the FT, as global demand for the metal soars and a diminishing number of big new mining projects affects supply. Commodities have enjoyed a “dizzying run’ in the past year, with copper, iron ore, palladium and timber hitting record highs in May.

The case for a commodities “supercycle” – a period in which prices rise above their long-term trend for between 10 and 35 years – rests primarily on investment in green technology. China needs to spend a “mind-blowing” $2 trillion a year for 40 years to get to net zero carbon, according to one analyst. Says another: “In terms of trying to decarbonise the world, the only possible way we can do that is through copper. There’s really nothing else that can conduct electricity as well.”

An electric vehicle contains five times more copper (60kg-83kg) than a car with an internal combustion engine, while a three-megawatt wind turbine uses up to 4.7 tons of the metal. The market for critical minerals such as copper, cobalt, and manganese will have to grow almost sevenfold between 2020 and 2030 if we are to achieve net zero emissions by 2050, says the International Energy Agency.

Many economists, however, are sceptical about the supercycle theory, believing the current boom in commodity prices is cyclical rather than structural. They cite strong (but temporary) Chinese demand, a post-pandemic economic recovery in Europe and the US, and disruption to supply chains.

Can anyone overtake Tesla?

It’s been a three-way fight between Jeff Bezos, Elon Musk and Richard Branson to be the first to fly their own rockets into space. This week the Amazon founder’s Blue Origin looked set to beat Musk’s frontrunner, SpaceX, to the punch with a planned trip on 20 July for Bezos and his brother – although the Daily Mail still holds out hope that Branson’s Virgin Galactic founder will spring a surprise on 4 July.

Space travel is not the only sector in which Musk is feeling the heat. Making electric cars is his other new frontier and, again, he may not have this all his own way. America spawned about 250 automobile marques by the 1910s, says The Economist, and a host of start-up insurgents in China, Britain and the US are now vying for a slice of an industry “that has turned decisively in the direction of battery power”.

Tesla’s $600bn valuation serves as a “torch at the front”, but investors are now looking for the next beacon. The Chinese companies Nio, Xpeng and Li Auto, all listed in New York, are already worth as much or more than many established carmakers. And He Xiaopeng, Xpeng’s boss, expects the market to swell to 300 or so firms before the winners emerge.

How to avoid the fate of the forgotten? The key steps for challengers will be finding a niche and stamping their technological mark on the industry. The “big and pricy premium” and mass-market segments are already crowded, others such as delivery vans and hypercars less so. Newcomers must then produce cars at scale, perhaps by repurposing existing factories or “teaming up with the old guard”. Finally, they have to sell and distribute the vehicles, and create a service network for when things go wrong.

One company with a trusted name, deep pockets and a proven ability to come up with clever tech is Apple. It has been working on an electric vehicle for several years and “the latest chatter is that it will have one in production by the middle of the decade”.

A bumpy ride at Rolls-Royce 

Ian Davis may be leaving Rolls-Royce in October with “one of the least wanted accolades in British corporate life”, says The Times. “It is hard to think of a chairman who has had to oversee more profit warnings on their watch.” Davis’s eight fraught years at Rolls were dogged by bribery and corruption scandals, faulty engines and, most recently, the widespread travel restrictions imposed in response to Covid. Best known for his role as managing director of McKinsey, Davis is a non-executive director of the energy giant BP and the leading US pharma company Johnson & Johnson.