Mining: The Original Real Asset

From manufacturing to the military, from AI datacenters to the digital economy, secure access to mineral commodities is of paramount importance. Over the coming decades, a sizable mismatch exists between projected supply and demand for critical minerals and metals. The pace of new mine development chronically lags requirements. Unless mine investment and development accelerate, a sharp rise in commodity prices is inevitable. In a rapidly evolving world facing complex and interconnected challenges, metals are increasingly at the heart of energy, defense, and technology policies.

At the same time, cyclical and macro drivers are creating renewed interest in real assets. Critical minerals and metals underpin virtually every aspect of modern life, making them foundational to growth, innovation, infrastructure, and security around the world. Investors are seeking new, diversified sources of uncorrelated returns during a period of significant change. “The era of great moderation, when growth was stable and inflation was 2%, is over,” stated economist Nouriel Roubini, whose recently launched ETF will maintain significant allocations to commodities and gold.¹

A growing chorus of experts advocate for the inclusion of real assets in a diversified portfolio resilient to economic and geopolitical shocks. Some experts proclaim they “represent the new safe haven asset,” offering a hedge against bond and equity volatility as the recent relative outperformance of sectors like Natural Resources is beginning to demonstrate.

Figure 1: Annualized Returns of Select Capital Indexes (Through December 2024)

Section I: Secular Drivers

The global economy is fundamentally reliant on mining and minerals. Extracted resources are not merely
commodities; they are the bedrock of future energy solutions, the cornerstone of national security, and
the essential components of technological progress. A secure and robust mineral supply is therefore not
just economically advantageous, but strategically imperative. Increased investment in mining and mineral
processing will be driven by three interconnected forces: Energy, Security, and Technology.

Energy

The global energy landscape is undergoing a dramatic transformation, driven by the urgent need to decarbonize. Minerals are central to this transition, powering generation, transmission, and storage. While the pursuit of cleaner energy has been a continuous historical trend, evolving from pre-Industrial Revolution reliance on wood and peat to modern emissions reduction efforts, the scale, urgency, and global coordination of the current transition are unprecedented. Over 190 nations have pledged significant greenhouse gas emissions reductions by 2030, catalyzing demand for innovative low-carbon energy technologies. This transition necessitates a radical shift from hydrocarbon dependence to a reliance on metals and minerals for electricity generation, impacting every facet of the energy value chain.

• Transmission and Storage: A robust electricity grid requires vast quantities of copper and other conductive materials. Advanced battery technologies for EVs and grid-scale storage depend critically on lithium, nickel, cobalt, and other key minerals. Securing access to these materials is paramount for grid reliability and widespread renewable energy adoption.

• Renewable Energy Generation: Wind turbines utilize significant amounts of copper and rare earth elements, while solar panels rely on silicon and other critical minerals. Nuclear power, a low-carbon source, requires uranium. The expansion of renewable infrastructure, including nuclear, necessitates a corresponding increase in these material supplies.

Figure 2: Annual Capacity Additions for Selected Clean Energy Technologies

• Decarbonization: The transition to a low-carbon economy requires not only renewable energy deployment but also the development of new industrial processes. Technologies like carbon capture and storage rely on specialized minerals. Investment in R&D, coupled with a secure supply of critical minerals, is essential for achieving decarbonization goals

The decarbonization and electrification trend is irreversible, notwithstanding near-term EV demand fluctuations. Long-term projections indicate higher metal intensity across power generation and transport driven by efficiency, environmental, and sustainability imperatives. While electric motors offer significantly higher efficiency (over 85%) compared to internal combustion engines (less than 40%), battery limitations remain. This creates market opportunities for various electric vehicle types, including self-charging hybrids, plug-in hybrids, and hydrogen fuel cell EVs, alongside full battery electric vehicles.

The increasing electrification trend is undeniable, particularly with the global introduction of competitively priced, high-quality EVs. This surge in EV adoption is mirrored by growth in stationary storage, driving the construction of numerous lithium-ion battery “gigafactories.” These large-scale production facilities will consume substantial quantities of lithium, nickel, manganese, copper, and other minerals, playing a critical role in meeting energy storage demands, supporting renewable energy deployment, and contributing to emissions reductions.

Accelerated metal supply is crucial to support EV demand and other decarbonization initiatives. Lithium alone requires a 250% production rate increase from 2024-2034 to meet projected energy transition scenarios. This presents a significant challenge, underscoring the need for increased mining investment. Several metals are particularly well-positioned to benefit:

Investing in mining and mineral processing is not simply about securing raw materials. The energy
transition necessitates a substantial increase in critical mineral supply. Proactive measures are crucial to
ensure access to the resources required for a sustainable and prosperous future. The future of energy
independence hinges on mining.

Security

National security is no longer solely defined by military strength. Access to critical minerals has emerged as a crucial geopolitical factor, influencing economic stability, technological competitiveness, and climate resilience. Reliance on foreign mineral sources creates vulnerabilities threatening national interests. China’s dominance in this sector, a virtual “mineral OPEC of one,” poses significant risks, amplified by recent geopolitical events.

The rise in armed conflicts and political instability, particularly in Eastern Europe, the Middle East, and Africa, is disrupting the mining industry and global supply chains. This heightened instability follows the 2020-2022 COVID lockdowns and the ongoing deterioration of trade relations between the United States, China and the rest of the world. Consequently, nations are prioritizing the onshoring of critical infrastructure to reduce supply chain dependence, implementing investment and policy interventions to facilitate this reshoring.

The war in Ukraine, the conflict between Israel and Iranian proxies, the evolving economic cold war between China and the United States, and the global climate crisis all impact metal demand. Russia’s substantial nickel, palladium, titanium, and other metal production has been significantly disrupted since the Ukraine invasion. As China and Russia strengthen ties and the U.S. reduces its reliance on Chinese technology, the intensifying superpower rivalry and global supply chain decoupling will escalate competition for metal and scarce mineral deposits worldwide.

National defense relies heavily on assured access to a diverse range of minerals and metals. These materials are essential for manufacturing everything from advanced weapon systems and military electronics to protective gear and infrastructure. Rare earth elements, for example, are critical for missile guidance systems and radar technology, while titanium and tungsten are crucial for aircraft and armored vehicle construction. Dependence on foreign sources for these materials creates supply chain vulnerabilities, potentially hindering military readiness and technological superiority. Securing reliable and diverse mineral sources is a strategic imperative

Figure 3: Geographical Distribution of Refined Material Production for Key Energy Transition Minerals by 2030

Three key factors underscore the importance of securing mineral supplies:

G7 governments recognize the critical importance of mineral access for global economic function and have implemented significant policy interventions. The U.S., under the Biden Administration, enacted landmark legislation like the Bipartisan Infrastructure Act, the CHIPS & Science Act, and the Inflation Reduction Act, driving investment in infrastructure, semiconductors, domestic energy production, climate initiatives, and security. While the Trump Administration will likely seek to change some aspects of how these three key pieces of legislation evolve, it would take an Act of Congress to change or repeal the laws.

If anything, the Trump Administration appears ready to embrace metals and mining in new and different ways than the previous administration. Signed on the first day of the new term, Executive Order #14154 — “Unleashing American Energy” — calls for easing restrictions and regulations around mine development and expediting permitting processes for critical mineral projects within the U.S. More pointedly, Executive Order #14241, signed on March 20, 2025, directs the CEO of the DFC and the Secretary of Defense “(to) develop and propose a plan… to establish a dedicated mineral and mineral production fund for domestic investments.”

Europe has also taken decisive action. The European Commission’s Critical Raw Materials Act (CRMA), enacted in response to the Ukraine war, aims to diversify EU raw material sources for green transition technologies. The CRMA is part of the broader “European Green Deal,” targeting EU climate neutrality by 2050. Similarly, Australia’s “Critical Minerals Strategy” recognizes growing global demand for resources vital for technologies like EVs and renewable energy

The rollback of globalization, onshoring of supply chains, and rising geopolitical tensions are reshaping the value of access to mining and mineral output. Commodity prices will inevitably adjust to this new reality, incentivizing investment in new mines. Investing in mining and mineral processing is not just about securing raw materials; it’s about economic stability, trade, defense, and geopolitical influence. The future of national security depends on mining.

Technology

Modern technology, from smartphones to supercomputers, is inextricably linked to a diverse and often obscure range of minerals. Demand for these materials will only intensify as technology advances. From the silicon in computer chips and the lithium in phone batteries to the rare earth elements powering smartphone speakers and the indium tin oxide coating touchscreens, minerals are the fundamental building blocks of our digital world. Even seemingly simple devices rely on a complex interplay of these materials, each crucial for functionality and performance. Continued technological innovation and miniaturization depend on access to and responsible sourcing of this diverse mineral wealth. The recent surge in artificial intelligence (AI) development is further supercharging this demand.

The late 2022 launch of ChatGPT ignited the growth and utility of AI in homes and workplaces. Logarithmic growth projections for AI are driven by datacenters capable of vastly higher computations per second than conventional servers, requiring significantly more electricity. Increased computation generates more heat, necessitating more energy-intensive cooling, resulting in a massive surge in energy consumption. Scientific American projects that the 1.5 million AI servers NVIDIA is expected to ship in 2027 will consume at least 85.4 terawatt-hours annually — more than the total electricity usage of many small countries. Goldman Sachs forecasts a 15% CAGR in U.S. power demand from AI datacenters between 2023 and 2030. These datacenters, virtually non-existent until recently, are projected to consume an estimated 8% of all U.S. power generation by 2030, becoming the largest contributor to overall U.S. power demand increases.

The advent of advanced AI systems has sparked a global competition. The technology industry recognizes that access to sufficient energy to power and cool data center infrastructure, along with uninterrupted access to advanced chips, are limiting factors for AI growth. Whether for baseload energy or chips, access to the requisite metals at the necessary purities is the common denominator. This need extends across numerous key emerging technologies:

Figure 4: Global Operation Stock of Industrial Robots

Figure 5: Space Launches by Year Since 2020

Figure 6: Revenue for US datacenters (2017 – 2029)

Source: Statista, “Rise of the Robots (November 27, 2023); U.S. International Trade Commission; Gunter’s Space Page – Information on spaceflight,
launch vehicles and satellites; Statista, “Revenue in the Data Center market for different segments Worldwide from 2018 to 2029” (July 25, 2024).

Demand from AI and new datacenters will strain electrical infrastructure and transmission systems, profoundly impacting energy supply and demand. Consequently, tech giants like Amazon, Google, and Microsoft are exploring nuclear power to advance AI capabilities. While uranium is one component of the solution, other metals — aluminum, copper, nickel, lithium, silicon, silver, tantalum, tin, and zinc — will play a central role in supporting this generational surge in power demand.

China’s power production growth has increased significantly over the past decade. “Last year, Chinese automaker BYD cast a shadow on other manufacturers when it managed to out-produce EV juggernaut Tesla. When BYD does something, it does it big. For example, its factory in Zhengzhou is growing rapidly. So large, in fact, that its overall footprint will soon be as large, if not larger, than the entire city of San Francisco, California.”² The United States and other G7 nations recognize the need to respond

Closing this widening gap requires a renewed focus on investment in upstream mining and midstream
mineral processing to secure continued access to the battery, electrical, and technology metals
required by industry. The future of technological innovation depends on mining.

Securing The Future

The confluence of geopolitics, economics, energy, materials, and technology has garnered unprecedented global attention. Investing in mining and mineral processing is not merely about securing raw materials; it’s about investing in the future of innovation, technology, and global competitiveness. Metals are critical for growth, infrastructure, and security worldwide, underpinning virtually every facet of modern life. From manufacturing and the military to datacenters and the digital economy, securing access to metal and mineral commodities is essential.

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Section II: Structural Trends

Despite accelerating demand for mined resources, mining capital expenditure (CAPEX) has languished over the past decade, particularly among Western investors, intensifying the looming supply-demand imbalance. A key impediment is the increasing regulatory burden in numerous mining jurisdictions, stifling supply-side investment in new mines. Capital is inherently risk-averse, especially when confronted with evolving regulatory frameworks, escalating operational costs, and protracted project timelines that delay returns on investment. Indeed, “access to capital” now constitutes the primary risk cited by mining companies worldwide.

Mining investment must precede fixed capital formation and global consumption of goods and services, not trail it. All available data underscore the urgent need to accelerate supply-side growth. However, current market dynamics reflect a de facto investors’ strike. Until the perceived risk profile improves, major miners and institutional investors are likely to remain on the sidelines. This reticence, however, presents a compelling contrarian investment opportunity for those with a longer-term perspective.

Consider the scale of the challenge: the global metals and mining industry, a US$2 trillion industry measured either by market capitalization or output, faces a daunting investment requirement. McKinsey estimates that the industry must deploy US$5.4 trillion by 2035 to sustain and expand production to meet projected demand.³ This represents an investment of nearly three times the industry’s current size in just over a decade. The longer the delay in aligning global demand with the necessary mining CAPEX, the more severe the repercussions for downstream sectors — construction, manufacturing, and technology — and the global economy as a whole.

The math does not work. McKinsey estimates US$5.4T, but the mining industry is only spending $100B. Mining is effectively dis-investing in itself with only 5% of revenue redeployed back into the sector today. Success is impossible without a step-change in capital investment from governments, the private sector, and public-alongside a larger reinvestment from mining companies.

The mining industry also faces a growing set of technical, engineering, and geological challenges exacerbating the need for investment. Mineral resources are diminishing in quality. The average copper ore grade in Chile declined by about 30% over the past 15 years.⁴ Minerals are also increasingly being found in more remote locations and challenging environments. This creates pressure on mining companies to invest more in technology, transport, fuel, and other resources to mine further with greater complexity.

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Section III: Real Assets Emerge

While private equity, initially focused on leveraged buyouts, remained a niche sector until the 1980s, its subsequent diversification into strategies like growth equity and distressed investing, coupled with increased institutional allocations driven by the pursuit of outsized, uncorrelated returns, propelled it into the mainstream. Private investing in real assets — encompassing real estate, infrastructure, and natural resources — represents a more recent evolution.

Uncorrelated Benefits

In their pursuit of enhanced diversification and differentiated returns, institutional investors began allocating capital to private real estate, gaining access to income-producing assets like office buildings, apartments, retail centers, healthcare facilities, and datacenters. Real asset exposure then expanded to include infrastructure investments, such as toll roads and power plants, offering stable, inflation-hedged returns. The commodity price boom of the 2000s increased the appeal of oil, gas, and precious metals as inflation hedges. Timberland and agricultural land also emerged as attractive investable asset classes as the compelling reasons for incorporating real assets into a diversified investment strategy became more widely acknowledged:

According to Preqin, investors view diversification, low correlation, and inflation hedge as reasons for investing in alternatives — benefits that real assets are uniquely positioned to provide. Real assets, like real estate, infrastructure, and commodities, tend to hold their value or even appreciate during inflationary periods. This direct link between real assets and increasing price levels makes them the rare sector that can maintain or even enhance its value when inflation erodes the purchasing power of traditional assets.

Figure 7: Diversification still driving investors into alternatives

Source: Preqin Investor Survey, November 2024

“Low correlation to other asset classes” was ranked as the second most often cited reason that investors allocated to natural resources. As can be seen in the following table, the Preqin Natural Resources Index does, in fact, exhibit some of the lowest levels of correlation versus nearly every major investible asset class.

Figure 8: Private Capital and Public Market Return Correlations

(Quarterly Return Correlations, Q4 2006 to Q3 2024)

Source: Preqin, S&P Capital IQ.

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Section IV: A Half-Century of Mining Returns

The mining industry, a foundational element of civilization and a critical supplier of raw materials for modern economies, has historically presented both lucrative opportunities and substantial risks for investors. A retrospective analysis of mining investment returns since 1970 reveals a complex and volatile landscape, shaped by commodity price cycles, technological advancements, geopolitical events, and evolving investor sentiment.

Mining Outperformance

Despite this volatility, mining and metals generated the highest cumulative returns compared to seven other real asset and natural resource sectors of global equity markets over the 25 years from 1999 to 2024 (see Figure 9). The sector’s strength during the early 2000s commodity supercycle is evident, a period of outperformance that persisted until the full impact of the global financial crisis reverberated throughout global economies, manifesting as a collapse in inflation, interest rates, and economic output.

Figure 9: Real asset cumulative returns

(January 1999 – May 2025)

This performance aligns with long established financial market understanding which demonstrate a positive correlation between inflation and real asset returns over more than a century. Credit Suisse’s analysis of over 100 years of data confirms that commodities are the only asset class that benefits from increased inflation. Conversely, it logically follows that commodities underperform during periods of decreasing inflation.

Figure 10: Correlations Between Inflation and Real Asset Returns for a Range of Asset Classes

(1900-2022)

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Section V: Mining Investment Entry Points

The mining and minerals industry, inherently complex and technically intricate, presents a unique set of investment challenges and opportunities. Institutional investors, recognizing the critical role of minerals in the global energy transition, technological advancement, and geopolitical security, are increasingly seeking exposure to this sector. Successfully navigating the complexities of mining investments, however, necessitates specialized knowledge and a nuanced understanding of the diverse entry points within the value chain.

Direct Equity Investment	Direct exposure to publicly listed companies is a common entry point	Major Mining Companies	Large-cap companies (typically >US$10B market capitalization) offer diversified portfolios of producing assets across multiple commodities and geographies. Investing in these companies offers exposure to established production, stable cash flows, and potential dividends, but may entail lower growth prospects than smaller players.
		Mid-Tier Mining Companies	These established producers (typically between US$1-10B market capitalization) generally have a narrower focus than “the majors” operating with a smaller geographic footprint and focusing on fewer commodities. Investing in mid-tier mining firms offers exposure to growth potential through later-stage exploration, acquisition or expanding reserves.
		Junior Mining Companies	Smaller companies (typically <US$500M market capitalization) are listed on exchanges like the TSX Venture, AIM, or ASX and focus on exploration and developing new mineral deposits. Investing in this sector carries higher risk due to exploration’s uncertainty but offers potential for significant capital gains if new discoveries are successfully brought into production.
Alternative Investment Structures	Alternative rights and structures offer differentiated participation to institutional investors.	Streaming & Royalties	Streaming agreements provide upfront capital for a long-term right to buy future production at a set price. Royalities grant a percentage of revenue or profits from mining. Usually covering the mine’s entire life, contracts can last for decades and include a share of future exploration discoveries. These strategies offer commodity price upside while reducing operational risks.
		Physical Metals and Derivatives	Investors seeking direct commodity exposure can invest in a select number of physical metals (e.g., gold bullion, copper cathodes) or utilize financial derivatives like futures contracts and options. Exchange-Traded Funds that track commodity indices or hold physical metals to provide another avenue for diversified exposure.
Adjacent Investments	The mining value chain offers investment opportunities in ancillary industries.	Infrastructure	Investing in transportation networks (e.g., railroads, ports), processing facilities (e.g., smelters, refineries), and power generation assets serving the mining industry can offer stable returns linked to sector growth.
		Services	Companies providing specialized services, such as engineering and construction firms, geological consulting firms, mining contractors, and equipment manufactures, offer other avenues for investment.
Actively Managed Fund	Managed by experienced teams with technical expertise, funds offer diversified exposure across commodities, regions, and stages of development.	Public Equity	Specializing in opportunities not readily accessible through passive investing. Investors benefit from the experience, knowledge, and networks of skilled managers, particularly in complex or less efficient markets.
		Private Equity	Experienced sector specialists with operating expertise look for undervalued assets, predict market trends, and actively adjust portfolios based on market shifts, economic events, or company news. Technical skill across the supply chain and the ability to forecast commodity trends are crucial, requiring broad experience across multiple metals and cycles. Private equity investors strive to ensure strong management, operational controls, and effective boards are established for successful exits.

Private Equity Investment in Mining

Modern mining private equity emerged in the late 20th century, pioneered by groundbreaking firms like Resource Capital Funds. Recognizing the inherent potential for robust, uncorrelated returns, these entities strategically channeled institutional capital into direct private mining ventures. Funding exploration, development, and acquisitions while often securing significant equity stakes, these firms expertly navigated diverse metal markets — from gold and copper, to iron ore, lithium and beyond — employing strategies focused on unlocking value through asset acquisition, brown- and greenfield development, and growth capital.

Mining private equity remains a specialized, dynamic sector. Without coordinated input from multiple technical domains, mining projects put investor success at risk. It demands deep industry experience, acumen, and technical mastery. A scientific, multidisciplinary approach is required to support the phased mining development lifecycle. Trained geologists, metallurgists, engineers, and environmental specialists bring critical insight and expertise to de-risk projects and enhance value creation. From evaluating mineral resource models and mineral process recovery strategies to optimizing mine design plans, these knowledgeable experts help ensure technical feasibility aligns with commercial objectives.

Among investment opportunities, private equity offers distinct advantages, such as direct ownership and control over critical assets and the ability to direct mineral offtake. This empowers investors to implement strategies and enhancements to increase value. The long-term nature of such investments provides crucial stability to navigate the cyclicality of the sector and capitalize on peak commodity pricing. Furthermore, the specialized knowledge and technical expertise embedded within private equity firms are indispensable for identifying and cultivating high-potential mining projects, which can mitigate risks and maximize returns. Innovative structuring, including streaming and royalty agreements, further enhances the appeal by offering exposure to commodity price upside while strategically reducing operational exposure.

The mining industry is currently undergoing a significant transformation driven by rising demand for critical minerals, the ongoing energy transition, and greater emphasis on environmental, social, and governance factors. These interconnected trends are reshaping mining investment, creating a range of challenges and opportunities that require specialized financial and operational expertise.

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Section VI: Conclusion

The mining industry stands at a critical inflection point, propelled by an insatiable global demand for essential minerals and a history of underinvestment. In an evolving global landscape, secure access to these commodities is no longer a question but a fundamental imperative for sustained global growth and industrial advancement. Mined metals are the bedrock upon which future energy infrastructure, decarbonization, technological innovation, and national defense capabilities will be built. Investing in mining and mineral processing transcends the mere acquisition of raw materials; it is a strategic imperative for ensuring economic stability, technological leadership, and geopolitical strength. While acknowledging regulatory complexities, supply-demand dynamics, and geopolitical considerations, these very challenges underscore the urgent need for proactive and strategic investment.

As the era of globalization and ultra-low interest rates recedes, the mining sector emerges as a compelling frontier for astute investors. It offers not only the prospect of uncorrelated returns and resilience against economic and geopolitical volatility but, more importantly, the opportunity to capitalize on the transformative power of mining to fuel progress and prosperity for decades to come. The future of this essential sector, and the returns it can generate, is bright.

1. Barrons, “Dr. Doom is Now ‘Dr. Realist,’ and he has a new ETF,” January 22, 2025. ↩︎
2. www.insideevs.com, March 24, 2025. ↩︎
3. McKinsey’s “Global Materials Perspective Report” 2024. ↩︎
4. The Role of Critical Minerals in Clean Energy Transitions, The International Energy Association. ↩︎