For years many investors have pointed to lithium as the number one beneficiary of the energy transition. Indeed, some of the ASX's biggest lithium players – like Pilbara Minerals Ltd (ASX: PLS) and Sayona Mining Ltd (ASX: SYA) – have seen their share prices double time and time again over the last five years.
But one less obvious commodity has more to gain from the world's electrification movement than lithium, according to Tribeca Global Natural Resources Ltd (ASX: TGF) portfolio manager Ben Cleary.
And that commodity is copper.
Let's take a look at why the fundie is bullish on the recently embattled metal and which ASX copper share he thinks has the brightest future.
Copper has most to gain from electrification: fundie
The price of copper hit a 17-month low early last month amid concerns of global recessions and a potential slowdown in China – the world's largest metals consumer.
The falling price of copper – as well as dips in other commodity prices – has been weighing on many ASX materials shares lately.
But there's a silver lining. The fall has presented a longer-term buying opportunity, Cleary's fund noted in its latest monthly update.
On top of that, the fundie apparently thinks copper has more to gain than lithium in the energy transition, telling Livewire.
Copper really is the biggest beneficiary of electric electrification and the world consuming more electricity going forward.
There is just not enough supply coming online to meet that demand growth.
The fund has noted it expects the supply of natural resources to tighten from 2024 onwards.
Meanwhile, Cleary told Livewire "big supply-demand deficits" in base and battery metals will kick off in 2025 to 2026. He said:
Copper, nickel, iron ore, oil, all these commodities are in very short supply generally. So, the markets are bearish to the point where stocks are trading at these very deeply depressed trough valuation levels, but inventory is low and demand is still strong.
We've stress test demand, and even with a recession in Europe and a slowdown in the US, we're still getting deficits.
Which ASX copper share is the fundie tipping?
Cleary's apparent favourite copper share comes in as one of Tribeca Global Natural Resources' largest holdings.
It is none other than $395 million copper developer Develop Global Ltd (ASX: DVP).
In mid-July, the fund tipped Develop Global shares to have a valuation of $3.20. That's 30% higher than where it's currently trading – $2.45.