Muzhu Mining Ltd. (CSE: MUZU)
Creating lasting wealth by developing gold and silver properties with near-term mining potential
Earlier this month, Craig McMillan, the Chief Financial Officer of Horizon Copper Corp. (TSXV: HCU), a copper mining project development company, revealed the development schedule for the Oyu Tolgoi project in an interview with “METALS 100.” Regarding the medium to long-term trend in the copper market, McMillan believes that the demand for copper will continue to rise over the next 5 to 10 years, with an increasingly apparent supply gap, indicating a bright outlook for copper prices.
Shortly after this statement was made, earlier this week, stimulated by expectations of production cuts in China, copper prices surged abruptly. The LME copper futures touched $9,000 per ton, reaching the highest level in 11 months. Some media sources indicated that large smelters in China are discussing the current raw material shortages and the rapid decline in processing fees, and are likely considering production cut measures. China is the largest consumer of copper globally.
However, compared to short-term trends, McMillan is more concerned about the medium to long-term trend of copper. This recent surge in copper prices began in early February, abruptly ending the months-long sideways trend.
Looking ahead, this metal is likely to benefit from the end of the Federal Reserve’s interest rate hiking cycle. The market expects rate cuts to begin as early as June. Goldman Sachs recently released a report stating that the potential rate cuts by the Federal Reserve will significantly boost metal prices, with the most significant impact expected on copper and gold. In a report, Macquarie stated that commodities are in the early stages of a cyclical recovery.
With gold prices frequently hitting historical highs in recent times, the question arises whether copper will further rise to become the next bullish commodity after this precious metal. This viewpoint is supported in the long term.
Firstly, there is a consensus market expectation for disruptions in copper mining and a tight supply-demand imbalance, driven by strong incremental demand for copper in new energy, which will continue to widen the supply-demand gap and remains a key driver of the global increase in copper demand. In 2023, the proportion of copper consumption for photovoltaic and new energy vehicles reached 12% of global copper demand.
On the supply side, the continuous interruptions in copper production in Peru and Chile, the world’s largest copper producers, have led to tightening supply conditions for copper mines. Over the past year, the copper exports of Peru and Chile have been affected by local unrest.
