Deng Xiaoping observed “the Middle East has oil; China has rare earths,” during his Southern tour of Shenzhen, Zhuhai, Guangzhou and Shanghai almost 35 years ago in 1992. More recently, China has stopped hiding its capabilities and biding its time (to quote Deng Xiaoping again), by interrupting and curtailing rare earth exports on multiple occasions in the past two decades.
Most recently in Feb 2026, the United States deployed its military to the Persian Gulf to address Iran’s nuclear program. This would have been a nonfunctional response capability in the absence of sufficient crude oil and rare earth magnets. One enables the other, and the foundations of economic, political and societal power must be protected, reinforced and productively renewed through ongoing investment.
This quarterly update could be titled ‘Oil, Rare Earths and Blue Water Navies’ to drive home the point. Growing, enhancing and preserving natural resource continuity, from vital minerals through to cutting edge technology is exactly why corporates, governments and strategists are spending so much time in critical mineral dialogues and partnerships around the world.
The first six months of 2026 have given commodity strategists plenty to think about. Specifically, this is what we have learned over the past quarter:
- Diesel availability – the oil market has proven far more resilient to the closure of the Strait of Hormuz than previously assumed. Above-ground inventories, supply-side diversions around the Strait, and China’s ability to curtail hydrocarbon demand all surprised to the upside. For the mining industry, diesel powers the trucks that deliver ore from the mine to the market. So better diesel availability than originally feared has been a very welcome development over the past few months. That said, diesel remains a critical input cost into the mining industry, prices are elevated, and the Gulf and Ukraine conflicts remain unresolved.
- Sulfur availability – the Gulf region accounts for nearly 50% of global seaborne sulfur and 63% of Asia’s sulfur imports. Sulfuric acid is not just a niche mining sector input; it is the most widely used industrial chemical globally. And it sits directly in the cost structure of RCF portfolio company offtakes: notably smelting, leaching, and production of copper metal and lithium carbonate. Sulfur and sulfuric acid are critical to the midstream transformation of ore and concentrates into usable metallic and chemical products. And the current sulfur trade disruptions are driving major regional and industrial dislocations.
- Gold’s inverse reaction – gold analysts have been preconditioned to expect a safe haven bid for gold in times of international conflict, which was wrong. Turns out initial conditions matter, where the steep run-up in gold price over the past two years provided an opportunity to plug fiscal deficits. Gulf ownership of physical gold metal allowed the petrostates to sell gold, once hydrocarbon trade was interrupted. Gold essentially performed its core function in the process, providing a physical store of wealth, as and when required.
- Global equity market indifference – the world equity basket (as represented by ACWI US Equity ETF) rose 13% in Q2 2026 alone, or 62% annualized, as passive & algorithmic strategies, artificial intelligence and North Asian semiconductor strength continued to drive global equity markets upwards. This capital growth continues to power the physical buildout of datacentres, along with the entire property, plant and equipment (PPE) infrastructure that supports the geostrategic race towards economic dominance of the 21st century. There is no hyperbole here; this only happens if there is sufficient metal for the build and sufficient energy to sustain the growth going forward.
Beyond these four lessons outlined above, the ongoing conflicts in the Persian Gulf and in Ukraine continue to draw on above-ground inventory of bulk, base and critical metal & mineral supply. Wars are inflationary and the rebuilds even more so, as damaged infrastructure is rebuilt, defence spending continues and materiel is restocked. This is all happening while the world’s richest companies deploy unprecedented capital into new technological hardware, in an all-out economic arms race to command the artificial intelligence capabilities and revenues of the future.
The RCF commodity strategy readthrough is our appetite for copper and lithium remains firmly intact, with expanding opportunities in other base, precious and select critical minerals. The direction of travel over the next decade is going to be very metals & mining demand intensive, against an underinvested and unprepared supply side, where RCF will continue to target the right markets at the right time.
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