By Divya Choudhury and Savio Shietty

DAVOS, Switzerland (Reuters – Commodity prices are expected to rise due to years of inadequate investment in metals mining. Supply shocks and rising energy prices, said Benedikt Sobokta, Chief Executive of Eurasian Resources Group (ERG).

He said that COVID-related logistics and the need for transparency regarding sustainability are all factors which have combined to create a storm in commodity market.

Sobokta claimed that a super cycle in commodity prices has already begun. It will last for 30 years. She predicts a 20 percent increase in price by 2022.

ERG, a Luxembourg-based private company, is a worldwide supplier of cobalt and copper. The company supplies iron ore, alumina, and the Kazakhstan-only producer of high quality aluminium.

Sobokta is of the opinion that any revival in oil-fuel use is temporary. The transition to a low carbon economy, which requires a projection of $50 trillion per decade, “cannot” be stopped.

He stated that the industry will need to invest between $200 and $300 billion per year in order to meet the demand for energy transition. Much of the money would be invested in the extraction of cobalt, nickel, and other metals.

Sobokta believes that countries and businesses will stockpile key raw materials such as oil and cobalt in these high-priced times.

Sobokta explained that small supply disruptions can cause big price swings. He also said that the impact on prices would be felt in 2022’s second half.

He said that major end-users like the automotive industry have already begun to negotiate long-term offtake agreements for metals, such as cobalt and lithium at current market price.

It tells you how difficult is it to find material for a long time – particularly material that has been clean from an ESG perspective (environmental. social. and governance).” He added.

(This was a Reuters Global Markets Forum interview. Register for GMF via Refinitiv Messenger