‘Another commodity supercycle is looming’
In an exclusive interview, Lundin Group Chairman Lukas Lundin discusses the outlook for various commodities, argues that we are on the brink of another commodity supercycle, and emphasises the need for companies to do more to protect their social license to operate.
We are on the cusp of another major commodity supercycle for minerals

‘The market for minerals looks very encouraging’
“In my view, we are definitely entering a commodity supercycle. The energy transition will be a key driver of this and will primarily impact minerals needed for new and low-carbon technologies. For example, demand for copper is growing significantly, partly due to increased demand for electric vehicles, and Lundin is not alone in needing to expand its mining operations to focus more on copper. At the moment, given that there aren’t many big new projects coming on line, copper production has some way to go before it can catch up with this growing demand. Favourable prices will help incentivise new projects.
Zinc and nickel will also see major price growth, with demand for zinc expected to be strengthened in part due to increased demand for galvanised steel. While market conditions for base metals are exceptionally good, I am also very bullish when it comes to gold for a variety of reasons, including a need to back up the amount of money printed by governments to support post-Covid recovery plans. On top of that, the latest US stimulus package of almost $2 trillion will drive demand for certain commodities due to its commitment to invest in infrastructure. China will also be investing heavily in growth and infrastructure, which will further support demand. So, from where I am standing today, the market for minerals looks very encouraging in the long term.
In parallel, oil and gas is under-invested and under-supplied right now, with demand stronger than supply. All the growth in supply is coming from shale oil in the US, which hasn’t really been that profitable. While demand for oil could be strong over the short to medium term, over the next decade, oil consumption will reduce mainly as combustion demand goes down. For the next few years, however, the market will remain relatively strong – especially as most infrastructure projects rely on heavy equipment that cannot run fully on electricity yet.”
We cannot ignore ESG issues – in particular carbon reductions
“Investor focus on ESG issues is constantly increasing. All the big funds now have to report to their trustees on ESG issues. The importance of these questions is growing and whether or not you agree with it as a company, you must spend time on it. For example, as part of our discussions in Lundin Energy, we understand that the public and other stakeholders are increasingly focused on how energy is produced. We have lowered our carbon footprint by electrifying our offshore platforms, including through the use of hydro- and wind-generated power from shore. People will not want to invest in oil and gas companies unless they can see a clear intention and a strategy to reduce carbon emissions, ideally with the ultimate goal of becoming carbon neutral. This will become a major differentiator between energy companies in the eyes of investors and other stakeholders and will increasingly impact access to capital.
Overall on ESG, unfortunately some of the metrics have been superficial, but as an industry, we have to adapt and work to fulfil the requirements of our shareholders and other important stakeholders. Demands for carbon neutrality will, in theory, be easier for mining companies to address than oil companies. For example, we are already seeing ‘environmental friendly’ labels being demanded by gold and diamond buyers, but it will be much harder to do this kind of labelling for a bulk commodity like oil. However, we should be moving in that direction, especially in relation to reducing the overall carbon intensity of energy production.”
Governments will need to balance the need for increased revenues with a desire to attract investments in the aftermath of the Covid-19 crisis
“As we slowly come of out of the pandemic and the various economic crises it has created, I think governments will look at ways to support the need for increased investments and to stimulate growth again. But many governments will be faced with a dilemma regarding how to maximise government revenues and increase local benefits while maintaining attractive investment conditions. Although some governments may try to renegotiate terms on existing projects, or raise taxes, this could deter future investments that are desperately needed. At the same time, if commodity prices rise significantly in the coming years, for example when it comes to copper, governments will be even more focused on ensuring they are getting their fair share.”
Companies have not always done a good job at securing the social license to operate
“In my view – and against the backdrop of recent global movements for greater equity and social justice – the social license to operate is the most important thing for the industry right now. We must go beyond basic requirements from a regulatory or operational perspective. This includes ensuring that we create local benefits, including through supporting local supply chains related to our operations, so that the affected communities are as involved as possible.
Companies have done a bad job at this in the past. For example, companies in Guatemala left a bad legacy, with many blaming the country instead of taking responsibility for their own actions. More recently, Rio Tinto’s destruction of aboriginal heritage sites was a major misstep. Lundin has also made mistakes in the past, but we have learned from this. The issues go beyond communication. Ultimately, we have to become even better at understanding the situation on the ground and taking constructive action. Even larger companies, who have the resources and the right tools to get things right, often get too stuck in their own internal bureaucracy to focus on the right actions. This needs to change.”
Philanthropy can play a part – but it is much better to invest in local development and commercial growth
“Philanthropy is generally very tough. The key question for me is: how do you empower people? It is usually more effective to support local capacity building and employment, than to simply give money away. For example, supporting local entrepreneurs who can create jobs is more effective use of money than giving handouts through aid agencies or NGOs. In our own philanthropy, we have learnt many lessons from spending money on the wrong things – but I think we are on the right track now. More broadly, the best way to support local development is to focus on our core business; find big deposits, open a mine, employ thousands of people, who in turn create another ten jobs each, who then pay taxes, and so on. For me, that is the real way to create benefits – through real business.”
Lukas Lundin and his family are the main shareholders of the companies within the Lundin Group. Lukas sits on the Boards of several publicly listed companies within the group, including Lundin Energy, Lundin Mining, Lundin Gold, and Lucara Diamonds among others.