The Commodity Super Cycle

On today’s show we are talking about the commodities super cycle. We often hear those words, but what do they actually mean? What does this mean for real estate investors?

I’ve witnessed the shocking price increase of copper wire. Six gauge wire is used in high load applications like stoves and clothes dryers, AC units, hot tubs and EV chargers. I’m seeing that wire pricing at over $5 per linear foot. That’s much higher than I ever remember. As we transition to using more electricity and away from gas based appliances, the demand for copper is going up. 

But the biggest issue is that the mines needed to produce these minerals take years to bring online. There is the entire regulatory process to get a mine approved which takes years. Then you need to make the capital investment and then develop the mine into a producing going concern. 

The cost structure that was in place the day the mine was conceived will always be dramatically different from the cost structure when the mine actually hits production. For example, the cost of a lithium mine in Canada is now forecast to be 38% higher than estimated just 18 months ago. Lithium is the key ingredient in Li=ion batteries which make up the majority of high performance batteries. It’s possible that new battery technologies will reduce our dependence on Lithium in favour of cheaper minerals like Sodium. But for now, we’re stuck with Lithium and copper. We don’t have a replacement for copper. 

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Host: Victor Menasce

email: podcast@victorjm.com