The Energy Transition Begins and Ends with Metals & Mining

Get Ready: The Mining Investment Environment

Commodity Insights

Listen to Rob Gray, Chief Commodities Strategist, Resource Capital Funds, discuss the massive demand trends for key energy transition metals that are needed to support global decarbonization efforts.

Filmed during RCF’s 2023 Macroeconomic and Mining Environment Update in March 2023

This is a slide that you’ve seen before, however, I’ve switched the order. I’m going to start with lithium because actually achieving the supply side growth in lithium is probably the easiest of the next four metals that I’m going to share.

Lithium is a young, small market where there are plenty of deposits that can be developed and products are moving forward very quickly. We had a question before the webinar on lithium and what we foresee, whether essentially, lithium will boom and bust again. The short answer is yes, it’s going to boom and bust a number of times over the next 10 years to 2032. It’s going to be driven by price and supply availability, but the demand for lithium is tremendous over the next 10-20-30 years. But the good news is there are the lithium projects out there and the lithium in the ground to support that tremendous growth profile.

The second energy storage market is nickel. Nickel is again going to grow substantially over the next 10 years from three to five million tons per annum. A lot of that growth over the last couple of years has been in Indonesia. So, the supply side expansion has been tremendous, but nickel has to keep going. It serves four key markets, starting with stainless steel, including batteries, as well as, some of the super alloys that are used in space and a number of different exotic applications, like turbines, hot zones in a jet engine, all nickel based. So, nickel is this incredibly useful metal that essentially we need more of. And if it’s not going to come from Indonesia, some of these other projects, which are greener, are going to be more difficult to develop. RCF has identified where we see the opportunity in nickel and we’re quite excited from a market perspective on the prospects of nickel.

Now moving up, we’re tripling the size of the market when we step up the zinc. Zinc is what I consider to be the hidden infrastructure metal that’s going to support everything that’s happening in decarbonization. The amount of zinc that goes into solar installations, the amount of zinc that goes into wind turbines, the mass, the galvanization, particularly the offshore, where you’re worried about corrosion. You know, zinc is that silent contributor. Now in the short term, we don’t see fantastic opportunity in zinc mining. We’re short zinc metal. However, we do see better opportunity in some of the development projects and a lot of that growth is going to be back ended towards 2032. So, the promise for zinc is bright, but it’s just not immediate for mine projects. In terms of the RCF portfolio, that fits with what we have in existing funds. A lot of our existing holdings are more earlier stage development opportunities, and they slot into how we see the market for zinc.

And finally, we have copper. Copper is the super tanker behind energy transition. Everything across the entire electrification industry span, however you want to think about, it’s all copper intensive. Copper needs to add another 10 million tons of production in the next 10 years. In the next few slides, I’ll highlight how much of a change that is from current trends. So, copper is a big, big step up and we’ve been bullish copper for a number of years since 2015 and we’d love to get even more copper exposure, but the better projects are hard to come by. But we’re doing the work and many of the investment teams are quite excited about what they’re looking at in the copper space.

So, in summary on this slide, these are the four metals that from our perspective primarily benefit from energy transition. Now, it’s not everything. We don’t have rare earths here. Rare earths are incredibly important to rare earth magnets, into electric motors. And we can include Molly. We can include a number of other commodities, but it’s all important. The key message that’s going to come through this whole presentation is that all metals are critical. They’re all under-invested as a result of where capital is flown and flowed into various sectors over the last 10 years or so.  A step change in the level of capital application to our sector is going to be price incentivized in short order.

What’s discussed: 

  • Metal requirements to support decarbonization trends 
  • Demand for Energy Transition Metals 
  • Lithium, Nickel, Zinc, and Copper.

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Important Information 

This material is provided for educational purposes only and should not be construed as research. The information presented is not a complete analysis of the commodities landscape.  

The opinions expressed may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and non-proprietary sources deemed by Resource Capital Funds and/or its affiliates (together, “RCF”) to be reliable. No representation is made that this information is accurate or complete. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this material is at the sole discretion of the reader.   

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