President Joe Biden is making a lot of people very happy lately, with his recent announcement of a new infrastructure deal set to create millions of jobs and boost demand for materials, minerals, and metals. The mining industry will have no small role to play in this plan, the result of a deal struck between five Democrats and five Republicans.
The bipartisan deal will lay out a plan for spending hundreds of billions of dollars on key infrastructure projects in the United States, including building roads, bridges, and highways in a massive coordinated effort to stimulate the American economy and create jobs in every sector of the economy. Of course, much of the job creation will be happening in the construction, planning, and other sectors directly related to the projects. Still, most ancillary sectors as well as many of the services needed to sustain these projects will benefit as well, particularly for those areas in which the projects will be running.
“We’ve struck a deal. A group of senators – five Democrats and five Republicans – has come together and forged an infrastructure agreement that will create millions of American jobs.”
The announcement boosted London copper prices last Friday, with a positive outlook for any and all metals that will be needed to supply this multi-year multi-billion dollar challenge. Better demand for metals in the coming years could translate into bigger profits for miners, and a supply push that could keep copper mining companies working hard to expand their mine portfolios and increase production rapidly.
Three-month copper on the London Metal Exchange advanced to $9,459 per tonne, and the most-traded August copper contracts on the Shanghai Future Exchange closed down 0.5% to $10,644.73 per tonne. This continues to plot copper’s rise to the possible $15,000 target set by Goldman Sachs earlier this year, and builds on the price momentum seen over the past two months.
While copper has been one of the biggest gainers this year, suppliers and steelmaker’s stocks surged after the announcement as well. Caterpillar jumped an additional 2.6% on Friday after a 3.8% gain on Thursday, the biggest in three months for the company.
The U.S. will require massive amounts of steel for this ambitious plan, and steel stocks are already reflecting that positive outlook. Friday saw U.S. Steel Corp. climb over 3% and the largest steel producer in the U.S. Nucor Corp. jumped 2% with the news. The bill and the infrastructure plan is a tide that is set to lift all boats, from the top of the supply chain to the bottom. Mining companies in particular will have their hands full filling the rising demand from this plan, and the supply dearth the market is experiencing now could accelerate with the possible new dynamic.
“The Bipartisan Infrastructure Framework represents the largest federal investment in public transit history – including the largest passenger rail investment since the creation of Amtrak. I might be a little biased, but that’s a big deal.
While the coming copper supercycle is something miners are sure to be looking forward to, they will also be kept on their toes for some time working to fulfill all of the potential this rocket ride will provide.
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