Years of under-investment in mining of metals essential to energy transition, supply shocks and high energy prices will continue to drive commodity prices higher, Eurasian Resources Group (ERG) CE Benedikt Sobotka said on Wednesday.
Combined with Covid-related logistical issues and demand for transparency on sustainability these factors have brought together "all the ingredients for a perfect storm in commodity markets," he told the Reuters Global Markets Forum in Davos.
Sobotka said that a commodity super cycle has now begun and will carry on for the next 30 years, predicting a 20% rise in copper prices by the end of 2022.
Luxembourg-based, privately-held ERG is a global supplier of copper and cobalt. It also supplies alumina and iron-ore and is the only producer of high-grade aluminium in Kazakhstan.
Sobotka believes a fossil fuel resurgence is temporary, and the transition to a lower carbon economy "cannot be stopped," which will require a projected $50-trillion in the next three decades.
"Anything between $200-billion to $300-billion in investment per year will be required for the mining industry to satisfy demand for the energy transition," he said, with much of this invested into the mining of copper, nickel, cobalt and other metals.
In an environment of high prices and supply chain pressures, Sobotka expects companies and countries to stockpile strategic raw materials, including oil, copper, cobalt and other metals.
"If you get small supply disruptions, you are going to see big swings in prices," Sobotka said, adding that he expected to see an impact in the second half of 2022.
Major end-users such as the automotive industry are already trying to strike long-term off-take agreements to buy metals such as lithium and cobalt at current market prices, he said.
"It tells you how difficult it is to get your hands on material long term - and particularly material that is clean from an ESG (environmental, social and governance) point of view," he added.