Wednesday 20 February 2019

Red Metal Goes Green During The Tesla Energy rEVolution: Frank Holmes - Will 2019 Be the Year of King Copper?

I would like to share with you today Frank Holmes's article about the big picture for copper and catalyses coming to this market in the next few years. It looks like Energy rEvolution is starting to take out our streets one by one for real with every new Tesla hitting the road. And now, finally, Tesla Model 3 is introducing the best electric cars at the more affordable prices on a truly massive mass-market scale. China is just going parabolic with EVs adoption and its "1000" new EV makers. Tesla Model Y will kill completely the brave idea that cars should be powered by the controlled explosions under the hood with enormous waste of energy and dire consequences to the health of not only the happy riders but the whole planet. The ICE Age is over and it is time to check your portfolios, Ladies and Gentlemen.

Frank Holmes is the must follow in The Switch - tectonic Energy transition happening in the world and all investment implications for the markets which are still mostly running on the oil fumes. He is CEO of U.S. Global Investors and you can follow his blog here and his twitter feed here. Both are highly recommended.

Talking about Mining Alliance of Trust initiative, Frank Holmes is one of the most trusted voices of common sense, sources of wealth of analysis, amazing charts and education for the generation of investors who are looking to stand out of the herd running to the slaughterhouse and gather the real understanding how the global economy really works and what factors are really driving it. And Mr Market, as you already know, lives his very own life which can be detached from any economic fundamentals for years by playing his favourite game aimed at hurting as many amateurs investors as possible. Here where Mining Alliance of Trust can help us all - we have enough risks in this business - we must weed out all bad actors ourselves as the industry. Every single burnt investor matters - they are never coming back.

We have a huge disconnect in our progress of technology and the material base which is making every single gadget tick and all Tesla Energy rEVolution possible. We must build a new EcoSystem which will allow the financing of full mining cycle in the West or face the world where supply chains are controlled by government-sponsored oligopolies. And this is an extremely polite way of describing the cut-throat competition to control the bottlenecks for the supply of critical materials like lithium for example. We need new ideas about how to connect available capital with entrepreneurs who are building our Green Future possible for all. Join our discussion about Blockchain Technology and the importance of Trust for the future of mining and energy.

The copper market is much more diversified than lithium one and China has not got all keys to the global supply yet, but make no mistake - smart money is buying all the best mining projects. Now, after bankers have been driving their Teslas for a few months, they are all getting the idea that electric cars are not just a fad, but this is the future of transport which is coming much faster than a lot of people are anticipating it. Frank provides great insights into this new excitement for the sector and what is driving the people who are making mining possible.

On our front of building the Green Energy Metals Energy Company, TNR Gold Team has delivered a few very important results already in 2019 after announcing our Strategic Initiatives: we have the very strong alliance with all our major shareholders. Our long-term investment loan was extended for another 3 years in order to allow the further growth of valuation for our existing Royalty Portfolio and active exploration of the new M&A opportunities. Our long-standing financing partner who is providing us capital is supporting our vision, strategic initiatives and the most important, our TNR Gold management Team. Strategic Controlling and active management of our investment portfolio have allowed us to announce the repayment in full of ILC Debenture earlier in February and now we are ready to move forward building our Company for the benefit of all shareholders.

This is where our business model comes into play. It is very important to mention that we do not need to contribute any CAPEX for our Royalty Holdings in Copper and Lithium. Mariana Lithium is being developed by Ganfeng Lithium - one of the major lithium companies from China. And legendary Rob McEwen is taking very good care of the future for the giant Los Azules copper project in Argentina. You can find more information about our NSR Royalty Holdings on the links below and Frank Holmes will connect the dots for you and explain why Red metal is going Green during the Tesla Energy rEVolution.

Tesla rEVolution And The End Of The ICE Age: Welcome A Golden Age For Copper - GEM Royalty TNR Gold Copper Presentation.

"I am very pleased that the TNR Gold team has the full support of the Company's investment loan capital provider who is supporting our business plan and long-term strategic initiatives," commented Kirill Klip, Executive Chairman of TNR. "It is clear that the decision of our investment loan capital provider is a resounding show of confidence in TNR Gold's long-term business strategy, asset portfolio and management team. Now we can concentrate our efforts on building this green energy metals royalty company by maximizing the value of our royalty portfolio of copper and lithium projects that are instrumental in the electric vehicle and green energy sectors, investigating new strategic acquisitions, and development of the Shotgun Gold project in Alaska. The essence of our business model is to have industry leaders like McEwen Mining and Ganfeng Lithium as operators on the projects that will potentially generate royalty cash flows to contribute and develop significant long-term value for our shareholders."


Please read legal disclaimer. There is no investment advice on this blog. Always consult a qualified financial adviser before any investment decisions. DYOR.

Frank Holmes:

Will 2019 Be the Year of King Copper?

February 19, 2019


  • Corporate purchasing of copper-gobbling renewable energy more than doubled from 2017 to 2018.
  • Sales of electric vehicles, which use three to four times the amount of copper as traditional vehicles, are booming in China.
  • Copper miners get upgraded by the big banks.
Because of its wide availability and exceptional conductivity, copper is found in everything from consumer products to automobiles to semiconductors. Last year global demand for the red metal stood at 23.6 million tons, and by 2027, it’s projected to reach just under 30 million tons, representing an average annual growth rate of about 2.6 percent.
This phenomenal growth is attributable not just to the rise of middle class consumers. It’s also thanks to our steady rotation into clean, renewable energy such as wind and solar—which is good news for copper demand going forward.
As I’ve shared with you before, renewables require many more times the amount of copper as traditional energy sources. A typical wind farm—those that blanket whole areas of West Texas, California and some other states—can contain as much as 15 million tons of the metal.

2018 Was a Record-Breaking Year for Renewables

Whether you’re a believer in renewable energy or not, the tipping point may have already occurred. Among the fastest growing jobs in the U.S. right now are wind turbine service technician and solar panel installer, for whatever that’s worth. And according to a report by Bloomberg New Energy Finance (BNEF), corporate purchasing of renewable energy more than doubled from 2017 to 2018. Globally, companies bought 13.4 gigawatts (GW) last year, compared to the previous record of 6.1 gigawatts in 2017. Over 63 percent of the purchasing activity occurred right here in the U.S. Facebook alone was responsible for consuming 2.6 GW of renewables, three times as much as the next biggest corporate energy buyer, AT&T.
The trend toward renewables is expected to accelerate at a white-knuckle pace for years to come. Take a look at the chart below, courtesy of McKinsey’s “Global Energy Perspective 2019.” Analysts believe that, by 2035, renewable energy will account for more than half of all power generation as its price falls below that of coal and gas-generated energy. Fifteen years after that, nearly three quarters of total energy consumed around the world will be derived from renewable means, chiefly wind and solar.
If this is compelling at all to you, now might be an excellent time to start participating. One of the best ways, I believe, is with exposure to high-quality, well-managed copper miners as well as funds that have a large position in copper mining.

China Will Lead the Transition from Internal Combustion Engines to Electric Cars

And we haven’t even mentioned electric vehicles (EVs), which are notorious copper gobblers. As I’ve shared with you before, EVs consume between three and four times the amount of copper as traditional internal combustion engines.
China is leading the world in EV adoption and will likely continue to do so for some time. In the fourth quarter of last year, China was responsible for 60 percent of global EV sales, according to Bloomberg, which adds that the country holds half of all vehicle-charging infrastructure. By the end of last year, electric cars made up about 7 percent of total new vehicle sales in China, with a compound growth rate of 118 percent since 2011. In about a decade, the Asian country will account for nearly 40 percent of the global EV market, followed by Europe (26 percent) and the U.S. (20 percent), according to BNEF.
Not only does China have national subsidies in place, but its carmakers are also incentivized to manufacture EVs thanks to the country’s “New Energy Vehicle” credit system. The system acts as an EV quota, requiring carmakers to generate credits through the sale of electric cars. According to BNEF, this is the “single most important piece of EV policy globally and is shaping automakers’ electrification plans.”
Adding to this acceleration is the fact that China has elevated the adoption of new “Phase 6” emissions standards under its anti-pollution “Blue Sky Defense” action plan. Just as we’re seeing in parts of Europe right now, China will soon begin banning the production of the most polluting diesel engines.
Many cities in China see the writing on the wall and have already enacted restrictions on gasoline-powered vehicle sales. In 2018, Shenzhen and Shanghai collectively led the world with more than 165,000 EV sales. That’s more than Norway and Germany combined.
With demand for EVs so high, it’s little wonder that China’s copper imports climbed to 479,000 tonnes in January, the second-highest on record.

Morgan Stanley Bullish on Copper, Upgrades Freeport-McMoRan

All of this leads me to believe that 2019 could be not only copper’s year but also copper miners’ year. The price of the red metal is up about 6 percent so far in 2019, trading at close to $2.80 a pound. That’s about 67 percent short of the metal’s all-time high of $4.62, set in February 2011.
Last week Morgan Stanley joined Citi and Goldman Sachs in making a bullish call on the metal. The investment bank projected a 14 percent upside for copper in 2019, based on a widening supply deficit and the likelihood of a resolution to the U.S.-China trade spat.
As for copper miners, Morgan Stanley upgraded Freeport-McMoRan, while Goldman Sachs recently upgraded Rio Tinto. Piyush Sood, lead analyst at Morgan Stanley, said in a note that Freeport’s “earnings sensitivity to copper is still the highest among its peers, and combined with its high trading liquidity, we believe it will emerge as the go-to large-cap stock for exposure to a copper price rally.” Shares of the Phoenix-based company’s stock jumped nearly 7 percent on the news last Wednesday.
Singapore-based DBS Bank also sees a copper shortage over the mid-term. Analysts expect supply to be in a deficit each year between now and at least 2022, when it could be at its widest since 2004.
“Copper is king for this electrification trend taking over the global economy,” Matt Gilli, CEO of Nevada Copper, told Reuters. “We see demand increasing steadily in the years ahead and, so far, supply is not keeping up.”
To meet surging demand, four U.S. copper projects are set to open by next year, the first to do so in decades, according to Reuters. And Ivanhoe Mines, founded by my friend Robert Friedland, is in the process of developing the Kamoa-Kakula copper deposit in the Democratic Republic of Congo, which Robert describes as the second-largest copper mine in the world.
“You’re going to need a telescope to see copper prices in 2021,” Robert told us when he visited our office last year.
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All opinions expressed and data provided are subject to change without notice. Some of these opinions may not be appropriate to every investor. By clicking the link(s) above, you will be directed to a third-party website(s). U.S. Global Investors does not endorse all information supplied by this/these website(s) and is not responsible for its/their content.
Holdings may change daily. Holdings are reported as of the most recent quarter-end. The following securities mentioned in the article were held by one or more accounts managed by U.S. Global Investors as of (12/31/2018): Freeport-McMoRan Inc., Ivanhoe Mines Ltd., Citigroup Inc."

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