CNBC Streets Signs with Matthew Langsford: Copper, Nickel, Lithium, Coal

June 06, 2023
Matthew Langsford recently caught up with CNBC to share our insights on the resources market. In our discussion with Will Kolouris and Tanvir Gill we discussed:
Terra Capital remains bullish medium to long term. The metal has the strongest supply demand thematic of the mined commodities we analyse and see Copper’s green demand growth as having the most diverse set of drivers: Energy storage, EVs, Wind & Solar
Short term weakness, particularly in Copper has to be put into context:
In the case of a moderate OECD recession, the copper market will still be in balanced to slight deficit this year. In the case of a severe GFC like recession, the copper market will be in a surplus of 300,000 tonnes for this year. To put that number in perspective, we saw supply disruptions this year of 400,000 tonnes just in Q1 – and we are forecasting supply disruptions. So we are talking about a very tight market here, likely to go into deficit over the next few years. Industry incumbents are seeing that – We’ve seen 5 M&A transactions, or attempted M&A in the case of Glencore’s bid for Teck: BHP bought OZ minerals, GLENCORE bid for TECK, Hudbay bought Copper Mountain, RIO bought Turqoise Hill and just recently we saw BHP increase its stake in Canadian miner Filo. Those in the industry are seeing the lack of projects on the horizon and are doing what they can to improve the situation via takeover. Of course that doesn’t really change the overall pipeline of copper projects through, they just change hands and we are still left with a shortage of new projects that need to be heading into development now to satiate demand.
We continue to see strong growth in copper demand from green demand – that is from Solar, wind, Energy storage and EVs. We think adding to high quality copper equities on near term weakness will pay off for investors
Terra Capital are moderate to bearish short term. We believe there is sufficient supply coming to market from Indonesia, this supply, which goes into the stainless steel market is relatively high cost but is expanding at such a rate that it is putting pressure on the entire nickel market
Terra Capital are Bullish but selective on equities and deposit types. Prefer miners vs briners and clays. The Bears will argue that supply wave is coming, which you cannot argue against (and it most definitely is coming), however lithium projects have a reputation of being extremely hard to ramp up and demand continues to grow for EV’s. We believe speed to production, asset location and management experience critical to selecting good investments in the space
Coal: (not a feature of the Green Metals Fund)
Terra Capital are bearish short term. Supply of thermal coal not restrained from Indonesia, Australian thermal supply recovering, production strong from China into seasonally weak period of activity. Metallurgical coal – coming into seasonally weak northern hemisphere summer period
Keep an eye out for more interviews from the team! 
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