Realistic Environmentalist, “Scientist” & Story Teller Gianni Kovacevic had a chat with us ahead of his appearance at Mines and Money London 2015. We asked Gianni a few questions about environmentalism in mining and his thoughts on the future of copper.
M&M: Gianni, you coined the term ‘realistic environmentalism’. What does it mean?
GK: Being a realistic environmentalist means that you’re a solutionist. You acknowledge that the world is changing, particularly the energy mix, the way we as a society create, transfer and utilise energy. But also you’re sympathetic to the fact that more people are consuming more things, in the next 15-20 years, almost everyone will have running water and an electricity bill.
When you put all that together, being a realistic environmentalist means that you’re also a solutionist and an algebraist in that you recognise that more is being consumed and that more importantly, as the energy complex changes, there are going to winners and there are going to be losers, and you embrace that from a scientific and fundamental point of view.
“Oil is energy, and energy without fossil fuels is electricity, and electricity demands copper”
M&M: Why is copper critical to developing economies?
GK: Copper underpins every economy because it’s in every part of it. As economies develop and things change, and as the energy complex changes, the more that is required is copper. I like to say that oil is energy, and energy without fossil fuels is electricity, and electricity demands copper. The more you think about it, even if you’re not in the spectrum of an environmentalist, the more you appreciate that fact fundamentally and the more that you embrace copper as a part of the solution. It’s critical not just for developing economies but every economy.
M&M: You’ve spent many years in the natural resource sector, What’s the best investment you’ve made and why?
GK: I’ve made some good and some bad investments over the years. There have been a few bad choices, and like anyone else sometimes there’s just some that don’t work out. The better ones have obviously been those that occur when the market falls in sympathy contrary to your sentiments.
“The best investments came out of the 2008 financial crisis”
Obviously copper has been very good to me. I invested in copper juniors in the early 2000s, and it did really well, not unlike other investors. The best investments however came out of the 2008 financial crisis. We invested in a copper mining concern, and it was all based on the price of copper. That share fell from $27 down to around $4, and it just kept falling so we bought it at $4 and again into the low $2’s per share. A year later it was back to up to £18 a share. It was a pretty compelling investment, with $4 per share in cash, $15 per share in paid facilities and zero debt…
M&M: What’s your one piece of advice to investors looking at the natural resource sector?
GK: Any investor has to have a medium to long-term horizon in the volatile commodity sector. One thing we can appreciate in 2015 – sentiment and evaluation are almost at all-times low. Just look at the facts and sophisticated financial institutions. I look at facts as an opportunity.
“There’s a change in energy and there will be winners and losers… the biggest winner is going to be copper”
There’s a change in energy and there will be winners and losers. I think oil and coal (in some respect) will be losers the price you can argue all day long, but in the long run there will be less demand for both of them. The biggest winner of that is going to be copper. You have to understand the supply and demand and have a grasp on the wants and needs that are changing with the direction the industry is heading. You need to follow it carefully and be involved every day. My latest article titled ‘Goldman Sachs vs, The Copper Price’ most succinctly articulates my current views as I think copper will be an outlier in the commodity space.
Read Gianni’s latest article ‘Goldman Sachs vs. The Price of Copper’ here
The 13th Annual Mines and Money London conference and exhibition takes place Nov 30 – Dec 3, 2015. To find out more, download the full programme here.
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