Expensive, extremely complex and fraught with risk - MJG Capital Matt Geiger on copper hurdles

Copper projects still need a better incentive price, said Matt Geiger, managing partner at MJG Capital. On Tuesday, Geiger spoke to Kitco Mining. MJG Capital is a limited partnership that specializes in long-term natural resource investments. Founded in 2011, the partnership holds a concentrated, long-only portfolio of natural resource equities.Geiger noted that copper-focused investments had increased significantly in his company's portfolio, up to 36%. Despite copper prices trading higher in 2024, the incentive price for greenlighting a copper mine needs to be higher. "[Copper mines] are extremely complex, technically difficult, and expensive projects to build that are fraught with risk," said Geiger. "This is far different than building a medium-sized gold mine that could go into production in a 12- to 18-month period."Geiger noted that the miners are still lagging the metal prices. While gold is up 16% year-to-date and copper is up 20% over the same period, he said that mining equities are not showing leverage to the metals. While other parts of the market have been on a tear, resources may soon have its turn. Interest rate cuts, strong earnings, and big M&A deals are all potential jump starts for resources."There's a number of potential catalysts to start revenge of the miners," said Geiger.  Geiger argued that the stark disparity between tech and commodities valuations could herald a significant shift. He pointed out that the last time such a gap existed, it was followed by a decade-long commodities bull market, noted Geiger in his July investor note. While this might offer little solace to mining-focused investors who missed the recent tech boom, he suggested it could indicate future opportunities.Geiger emphasized the intrinsic link between the mining and tech industries, despite this connection being largely overlooked in Silicon Valley. He highlighted that AI data centers, consumer technology, electric vehicles, national defense applications, and clean tech are fundamentally dependent on a wide array of metals extracted globally.Geiger cautioned that if history were to repeat itself, substantial increases in metal prices could be on the horizon. He warned that such rises, and their impact on the cost and adoption rates of new technologies, might come as a stark revelation to many, said Geiger.Disclaimer: The views expressed in this podcast are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this podcast do not accept culpability for losses and/ or damages arising from the use of this publication.