UK portfolio manager tells Menell and Trahar to rein in talk of metals panic

George Cheveley, portfolio manager, Ninety One (London).

PORTFOLIO manager George Cheveley urged market temperance last week following claims by two members from prominent South African mining families there were chronic shortages in critical minerals.

Speaking at the London Indaba, a conference, Ninety One’s Cheveley said mining firms should guard against “calling that the sky is going to fall in” on supply and demand. The divide between copper supply and demand had been fairly consistent over the last 20 years, he said on a conference panel.

His comments weren’t popular with Brian Menell, a third generation member of the Menell family which – with the Hersov family helped create the mining and industrial empire Anglovaal Group – during the seventies and eighties. Brian Menell’s brother, Rick is a promiment figure in South Africa’s mining sector.

“If Tesla is to reach 20 million electric vehicles a year by 2030 that will require two times the current lithium annually mined supply,” Brian Menell said at the conference. “That is before GM, Ford and VW (electric vehicle production) and before the Chinese which already produce two-thirds of the world’s EV batteries.”

Menell said that in this context there is no shortage of attractively priced assets in which to invest. “There is a lull in the artificially depressed market at the moment before a 10-year bull run,” he added.

Menell is the founder of TechMet, a shareholder in Rainbow Rare Earths which plans to extract rare earth minerals from historic tailings in Phalaborwa. Also in Africa, TechMet owns Trinity Metals in Rwanda, which has six tin and tungsten mines.

Andrew Trahar, the son of former Anglo American CEO Tony, said at the conference there was “genuine panic” for metals among automakers – but he added the nuance that it’s not for every metal. Copper should not be the proxy of metal supply into the energy transition business, he said.

Trahar is a co-founder of Vision Blue Resources with former Xstrata boss Sir Mick Davis. Tony Trahar is an advisor to Vision Blue which has invested in Madagascar’s graphite sector.

Having ‘chaperoned’ the company’s graphite investment in meetings with automakers recently, there was enormous interest in having those meetings, he said. “It was genuine panic for graphite, some cobalt and genuine panic for nickel.”

Cheveley was unmoved.

Alarmism will give pause on the demand side to take appropriate action. “Automakers will say: ‘I read everywhere I should be using 90 kilograms of copper for a car; right engineers, how do I use 50 or 60kg'”, he said.

Mining companies “spent big” in 2010 only for the iron ore market to crash. “It’s scary for investors because they remember that; people lost their jobs,” said Cheveley.

Bank of America said in a report in May that metal inventories were depleted across trading exchanges and in the supply chain notwithstanding weak underlying demand. “Consumers are way of being caught short,” the bank said. “Copper inventories look critically low and our forecast supply surplus for 2023 has all but disappeared.”