Eurasian Resources Group ERG Chief Executive Benedikt Sobotka said on Wednesday that years of underinvestment in mining metals essential to energy transition, supply shocks and high energy prices will continue to drive commodity prices higher.
He told the Reuters Global Markets Forum in Davos that all of the ingredients have been brought together by COVID-related logistical issues and demand for transparency on sustainability.
Sobotka predicted a 20% increase in copper prices by the end of 2022 and that a commodity super cycle will continue for the next 30 years.
ERG is a Luxembourg-based private-owned company that is a global supplier of copper and cobalt. It supplies alumina and iron ore and is the only producer of high-grade aluminium in Kazakhstan.
Sobotka believes that 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.
He said that anything between $200 -- $300 billion in investment per year will be required for the mining industry to meet demand for the energy transition, with much of this invested into the mining of copper, nickel, cobalt and other metals.
Sobotka expects companies and countries to stock strategic raw materials, including oil, copper, cobalt and other metals, in an environment of high prices and supply chain pressures.
Sobotka said that if you get small supply disruptions, you're going to see big swings in prices, and he expects to see an impact in the second half of 2022.
He said that 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 was very hard to get your hands on material long term, and particularly material that is clean from an ESG environmental, social and governance point of view.