Atalaya Mining Copper, SA (LON:ATYM) was the topic of conversation when DirectorsTalk interviewed Gervais Williams, Co-Fund Manager of The Diverse Income Trust plc (LON:DIVI) on what’s driven the Trust’s strong performance and the outlook for a number of its portfolio holdings.
DirectorsTalk asked: Atalaya Mining Copper shares have performed strongly, with copper prices playing such a crucial role. What factors give you confidence in the company’s future performance?
Gervais noted: Atalaya Mining is bringing on a Spanish copper mine. It’s already producing, they’re bringing new faces in, and they’ve got some new opportunities to expand further.
What’s been interesting about the copper market, particularly in the last 12 months, is that 12 months ago, when you had your copper concentrate, you would get different refiners who would take it on, and you’d pay for the refiners to refine it and get a profit margin on the back of that. What’s been interesting about the last 12 months is actually, with all the different data centres opening and more electric vehicles being made, the refiners are short of concentrate. So, the market’s completely turned around.
If you’ve got concentrate, the refiners are bidding you to pay you to take on that so they can then refine out the copper and other metals within the concentrate and actually generate a profit. So, the profit margins have gone up significantly in copper mining and on top of that, of course, copper prices have also been moving on. We’ve seen what’s happened in the gold price and copper price is beginning to move on.
Unfortunately, some of you will have read that there was a very serious accident in Indonesia on 8th of September, unfortunately two people killed, five people still missing. Specifically, 800,000 tonnes of mud flooded this Indonesian copper mine so I think it will be a long time before that comes back into production.
So, we’ve got a shortage of supply, demand coming through very strongly and we think Atalaya Mining are superbly positioned for this upside.
