Lifton describes copper as ‘nerves of civilization’

In a keynote address at Byron Capital Markets’ third annual conference on electric metals in Toronto on April 19, Jack Lifton warned that copper shortages should be a far greater concern than electric metals, such as rare earths, graphite and lithium.

“Copper is a huge problem,” declared Lifton, a consultant and cofounder of Technology Metals Research, which examines the market fundamentals of technology metals. “The increase in world production is less than the increase in demand, and that is a problem, a real problem, because everything we’re talking about — lithium, graphite, rare earths — all depend, if you’re going to do clean tech, on the flow of electricity. And electricity is piped by copper. Nothing else.”

Calling copper “the nerves of our civilization,” Lifton accused the world of ignoring it, and quoted statistics from the International Copper Association that showed copper production growth last year was in the order of 4.6% of the gross, and the gross production figure, according to the United States Geological Survey (USGS), was 16.1 million tonnes. Lifton clarified in a later email response to questions that the USGS revises its numbers only once a year, and he would not be surprised if next year the 2011 total is revised to 17 million tonnes.

“Copper production maintenance is a looming issue, no matter who does the numbers,” he said. “Since Chinese demand is increasing, guess what happens, unless you can continue producing copper at just a 4% increase? At some point in time, we run into another crisis that will make the rare earth crisis minor by comparison.

“People are telling me it doesn’t matter,” he continued. “They don’t understand the difference between transmitting information and energy. The only other way, other than a copper wire, is microwave-beaming from space, which also requires copper wire. At the receiving end you’ve got to get the energy to your washing machine.

“I know we’re all interested in these exotic metals, the technology metals and so on, but keep your eye on copper and aluminum and especially on things like molybdenum and tungsten,” he added. “Tungsten is the key to our metal-cutting culture, and molybdenum is the way we pipecool water around without wearing out the steel.”

“We’re all looking at the leaves,” he concluded. “And some people are studying the insects on the leaves, but no one is looking at the forest.”

In a separate presentation later in the day on rare earth metals, Lifton noted there were about 260 listed rare earth ventures and 400 deposits, but that the world only needs a few light rare earth producers and heavy rare earth producers, and argued that the ones that are really needed have the lowest costs, and the lowest break-even.

“I think the exploration phase has more or less concluded,” he added. “We’re going to see a shakeout in this phase.”

Lifton remarked that outside of China, Canada is the country with the most prolific deposits of rare earth elements — or one half of the world’s total — and speculated that the country “is going to be the home of some survivors.”

He forecasts those survivors will include Rare Element Resources (RES-T, REE-X) and Great Western Minerals Group (GWG-V).

Lifton also confided that Great Western Minerals Group is the only stock he owns.

“I bought it in 1969 and I’ve been holding it ever since,” he said. “I don’t own any other shares of any other companies, in any field.”

Great Western Minerals’ monazite- hosted Steenkampskraal mine in South Africa hosts the highest historical grades of rare earth oxides at 16.7%. It is also fully integrated, with raw material from its mine, as well as metal and alloying capabilities from its subsidiary, Less Common Metals, and a magnet end-buyer from Aichi Steel Corporation, a member of the Toyota Group of Companies.

Jon Hykawy of Byron Capital Markets has a “strong buy” on the stock with a target price of $3.40 per share. At presstime the company traded at 43¢, within a 52- week range of 39¢–98¢.