As 2024 gets into full swing, a series of topics relating to the mining industry have already emerged as top trends for the latest leap year.
According to the Top 10 Themes for 2024 from Sprott Asset Management, deglobalisation — the process of reversing or reducing the interdependence of the world economy — continues and is the top theme for 2024 amid pessimistic expectations fuelled by a 5% fall in global trade in 2023.
At number two, Sprott notes energy security — having available and sufficient energy at affordable prices— is becoming more critical as the market learns to manage new and more complex risks caused by ‘significant’ events in recent years.
The risks include how to diversify and integrate different energy sources, create resilience to shocks and changes, and promote transparency in energy markets and policies.
while the world continues to wake up to the importance of energy security, the sector is still being driven by an ongoing push towards decarbonisation and the global transition to renewable energy, according to the Sprott report.
Sprott notes that number three is the emerging supercycle driven by the transition to renewable energy taking shape worldwide. Copper, a mature, well-developed industrial metal crucial for electric vehicle (EV) transportation and electrical infrastructure, is set to see ‘substantial’ demand growth, the report says.
the report indicates economic factors, such as demands from the electricity grid, EVs, and renewable energy deployments (which are anticipated to accelerate in 2024), are expected to worsen an already struggling supply-demand imbalance.
On the contrary, world mine production in 2024 is forecast to rise by 3.7% as a result of additional output from new or expanded mines, mainly in D.R. Congo, Peru, and Chile, according to the International Copper Study Group.
Further, a surplus of 467,000 tonnes is expected for 2024.
Meanwhile, Sprott forecasts the 2023 ‘blockbuster’ year for uranium and uranium miners is projected to continue throughout the year. The uranium spot price gained 88.54% to end 2023 at US$91.09 per pound (/lb), driven by the demand by an increase in utility contracting to replacement rate.
As of 15 January 2024, uranium spot prices soared to US$106/lb, the highest since 2007, demonstrating the bullish ‘long-term’ fundamentals of the nuclear energy metals, as per Trading Economics.
It is only the second time in history that the uranium spot price breached US$100.
As reported by Sprott in September 2023, global sentiment toward nuclear energy has improved ‘significantly’ in the past few years, reigniting the industry after the “lost decade” that followed the 2011 Fukushima Daiichi power plant disaster.
Currently, 434 nuclear power plants operate worldwide, with 59 under construction and 111 more planned, as per Sprott.
Another metal critical for the global energy transition is lithium. However, the critical metal spot price witnessed a sharp fall throughout 2023, closing with a drop of 81.95%.
However, the precipitous decline in lithium halted in December 2023 as the price intersected further into the cost curve — posing a threat to higher-cost projects under development, says the Sprott report.
Nevertheless, both the report and lithium experts remain bullish on a rebound in the lithium market given the long-term fundamentals are touted to remain intact as nations face the challenge of meeting ambitious demand requirements of net-zero emissions by 2050.
The report adds that gold, following a record-breaking and resilient 2023, may be poised to reach even greater heights in 2024.
Sprott predicts a less ‘hawkish’ Federal Reserve stance could bolster gold prices and — in anticipation of this shift — prompt further short covering and new long commodity futures trading commission (CFTC) and exchange traded funds (ETF) positions in gold.
Gold reached an all-time high after touching the US$2,000 mark multiple times in 2023 following ‘aggressive’ buying from central banks and sovereigns overcoming the negative impact of high real interest rates and a ‘strong’ US dollar.
Looking to follow in gold’s footsteps is fellow safe-haven precious metal silver, which is anticipated for a breakout in 2024, according to Sprott.
Driven by low interest rates, more ‘robust’ physical investment, ETF purchases, and increased industrial demand, silver has the potential to outperform during the rally phase as it plays catch-up to gold’s price movements.
Write to Adam Drought at Mining.com.au
Images: True North Copper, Terra Uranium & iStock
