Invest in Glencore: a cheap play on global growth

Glencore looks historically cheap, yet the group’s prospects remain encouraging

In this photo illustration, a Glencore logo is displayed
(Image credit: Sheldon Cooper/SOPA Images/LightRocket via Getty Image)

In 2022, copper was the world’s hottest commodity. The price had surged from $6,000 per tonne in 2019 to $11,000 by mid-2021. Analysts were predicting further growth as the green transition turbocharged demand. Gary Nagle, the head of Glencore (LSE: GLEN), one of the world’s largest commodity companies, told the Financial Times that the copper supply would need to rise by an extra million tonnes a year by 2050 to meet green-energy targets. That demand, he predicted, would drive prices to $15,000.

However, far from spiking, prices have consolidated. The price dropped to a post-Covid low of $7,000 a tonne in mid-2022 before rising to nearly $11,000 a tonne early this year. It has since dropped back to the mid-$9,000 level. Still, the demand for copper hasn’t gone away. Australian miner BHP expects the world to consume an extra one million tonnes of copper per year until 2035. The demand for green energy and artificial intelligence (AI) data centres will drive the growth. AI could increase global copper demand by 3.4 million tonnes a year by 2050, BHP’s chief financial officer, Vandita Pant, told the Financial Times in September. So the outlook for the red metal appears to remain strong, but this year, weak demand in China has weighed on copper prices. Concern over China’s economic prospects has also hit the mining sector.

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Rupert Hargreaves
Contributor and former deputy digital editor of MoneyWeek

Rupert is the former deputy digital editor of MoneyWeek. He's an active investor and has always been fascinated by the world of business and investing. His style has been heavily influenced by US investors Warren Buffett and Philip Carret. He is always looking for high-quality growth opportunities trading at a reasonable price, preferring cash generative businesses with strong balance sheets over blue-sky growth stocks.

Rupert has written for many UK and international publications including the Motley Fool, Gurufocus and ValueWalk, aimed at a range of readers; from the first timers to experienced high-net-worth individuals. Rupert has also founded and managed several businesses, including the New York-based hedge fund newsletter, Hidden Value Stocks. He has written over 20 ebooks and appeared as an expert commentator on the BBC World Service.