Strategic context

Global trends 

Three key global trends inform our long-run price forecasts and portfolio decisions.

Global economic development

• There is increasing regionalisation and protectionism, and desire for supply security, contributing to: 
• the rerouting of global trade routes 
• increasing military expenditure 
• increasing trade barriers. 

• Global economic growth prospects over the next few decades are softening as the pace of global trade and investment slows. 
• However, the traditional growth drivers of metals demand remain robust (ie population growth, industrialisation and urbanisation 
  in emerging markets), with new drivers emerging (eg AI data centres, robotics).

Energy transition

• Global electricity demand continues to grow. 
• Although timelines to net zero are slipping, renewables are an increasing share of energy supply, supported by their improved cost competitiveness relative to hydrocarbons. 
• The expansion of new power generation, transmission, and distribution infrastructure is a significant driver for aluminium, copper and lithium.
  
   

Persistent supply constraints 

• Scrap has consistently under-performed expectations, with lower demolition rates, longer life cycles and lower scrap recovery, creating additional requirements for primary supply.
• Mine delivery timelines continue to expand. Discovery rates are declining, and grades worsening. We see increasingly complex approval processes, higher environmental and social standards, and deeper orebodies requiring more complex engineering. 
• Supply growth is frequently more costly than previously anticipated – increasing capital intensity is a challenge across the industry.

What these trends mean for our markets and commodities 

• Continued strong demand outlook across our 4 commodities.
• Growth outlook for energy transition-linked metals remains strong.
• Positive upside for metals and mining companies with diverse geographical footprints, or trading capabilities, or both. 
• Price outlook across our 4 commodities remains strong.

Across our 4 commodities specifically:

• Iron ore: robust steel demand growth from the Global South will compensate (in part or in full) for expected decline in demand from China. Incremental iron ore supply growth is needed just to offset depletions.
• Copper: has an attractive demand outlook driven by electrification. There is a significant supply gap due to increased cost and complexity of new primary supply.
• Aluminium: steepening of the cost curve with new supply being added outside of China and rising electricity costs. This underpins strong long-run pricing.
• Lithium: falling battery prices continue to improve the cost competitiveness of electric vehicles versus internal combustion engine vehicles, and is coupled with increasing demand for battery energy storage systems.