He thinks the copper price will go higher and stay there for longer and that demand will continue to be robust. The demand-supply balance is finely tuned, and the sector has been spoiled for some years with no supply disruptions. He says there is unpredictability with mining in Indonesia right now.
Declining grades and resources at the worlds best mines ensure there is a significant upside in demand coming. The mining industry has been focused on cost reduction for the past several years, and Expansion budgets have been slashed. The supply deficits will have to come from places like Peru, Congo, Zambia, and Russia. Hardly places that risk adverse financiers would regard as safe.
He discusses Oyu Tolgoi now Mongolia’s largest mine. Phase one of the project took over 15 years and cost one billion dollars. Then there was six billion in investment creating the mine and supporting infrastructure. When the underground part of the project is completed, the mine will still represent less than 3% of worldwide production.
Cameron discusses in depth the economic and government factors to development in Ecuador and Mongolia. He is quite happy with the overall outlook for the future of mining in Mongolia and discusses a couple of companies with potential for prospects there.
Cameron has been involved with Kincora (CVE:KCC) and he is a believer in the Southern Gobi region having major discoveries. They have some exciting targets that they have just begun drilling.
The iPath Bloomberg Copper Subindex Total Return Sub-Index ETN (NYSE:JJC) was unchanged in premarket trading Tuesday. Year-to-date, JJC has gained 17.17%, versus a 12.75% rise in the benchmark S&P 500 index during the same period.
This article is brought to you courtesy of Palisade Research.