Frontier Markets Gain Leverage As Metal Prices Rise On Developed-World Demand

Increased global demand for precious metals, particularly copper, has increased negotiating leverage in foreign markets that mine those metals.

Market prices for copper continue to rise considerably in the wake of this newfound leverage.

The price of copper, for instance, rose significantly in value this year to $7,000 a ton. In 2016, a ton of copper was worth about $4,300 — a 63% increase.

Copper price per ton, 1 year.

The price clim has international mining companies scrambling to uncover new copper supply.

Miners are flocking to countries such as Chile, home to a highly developed mining industry and the world’s main supplier, but also remote frontier markets such as Mongolia and the Democratic Republic of Congo.

In the rush to find new sources of copper also comes an appreciable loss in negotiating power for buyers. Copper is a major input for big developed and developing economies, including China, India and the West.

David Manley, an economist for the London based Natural Resource Governance Institute, notes that frontier market governments can now negotiate deals that increase their take on the profits.

Before the price surge in precious metals, frontier markets had to take what they could get. “We know every time there’s a price boom or a price bust, you see a lot of government’s trying to change taxes either up or down,” said Manley.

“The miners just don’t have as much as power as they did,” Manley continued.

Frontier leverage

Mining industry companies and private investors used to steer clear of frontier markets.

Frontier market governments usually feature unstable governments, fragile infrastructure, harsh weather environs and volatile or weak economies.

Such countries can also experience intense and dangerous political violence.

However, frontier markets also can be wealthy in resources that have current or future business applications to businesses in emerging markets and in the developed world.

Another factor contributing to the marked leverage that frontier market now enjoy is rising demand is electric cars and renewable energy technology.

Cobalt and other precious metals are used in component and parts for electric cars and renewable energy tech.

Iaccino: Bitcoin a Better Hedge Than Gold? Look at the Data

Bob Iaccino, editor of the Stock Think Tank, sees the relative stability of Bitcoin compared to gold as a sign that its legitimacy as a hedge is coming into view.

costco cost

The Dividend Stock That Belongs in Every Portfolio

If you are like me, then you are always looking for great companies that are on sale. What makes the company a bonus buy is when it also pays a

Bitcoin and Gold Slaying Stocks: Why Not Own Both?

The Bitcoin vs. gold battle rages on as the two are best-performing assets of 2020. The price of gold is up 26% this year, while Bitcoin has soared 87% —

Companies Pile On Debt. Big Headaches Later for Investors?

How have companies handled the cash crunch during this pandemic? I came across an insightful in-depth research report this past week that had a few interesting charts on this. See

Potential Options Payoff in Post-Covid China Rebound

The Chinese economy is starting to show signs that it is rebounding better than other economies around the world. China was the first country that had to battle the COVID-19

Retirement Income Tip: Buy High-Yielding Dividend Stocks

Imagine a scenario where you can make money while you sleep. Sounds too good to be true, right? Enter high-yielding dividend stocks. Now, there are lots of stocks in the

Beat the S&P 500 with These Specific Stocks

Today I'm going to briefly discuss a major error that most stock market participants make on a regular basis and ways in which you can substantially increase your stock returns.

Iaccino: Dollar Down, Stocks Higher, Plus PayPal Meets Bitcoin

A renewal of federal stimulus on top of monetary stimulus after the election is likely to support the stock market, says Bob Iaccino, editor of the Stock Think Tank. The

investor or pay off debt

Invest or Pay Off Debt? In a Pandemic, I’m a Stock Buyer

If you were to tell someone that you were putting any extra cash you had into the market instead of paying off debt, they might think you have lost your

bitcoin mass adoption

Bitcoin Mass Adoption Can’t Be Far Off — That Means Surging Demand

When you look at past technological developments — from the 19th century industrial revolution through the introduction of the telephone, personal computers, Internet, and smartphones — there is a typical

stocks overvalued

Is the Stock Market Overvalued? Not By This Measure

You many have heard the term “TINA” mentioned in various financial and investment commentaries in recent months. This is an acronym for “There is No Alternative.” It is built around a

clx options

Options Play: Take Advantage of Bearish Sentiment On Clorox (CLX)

We are in the middle of a global pandemic and one of the best weapons against the virus is cleaning surfaces with bleach. If we were to ask 100 people