Mining tycoons like Andrew Forest, Gina Reinhart, and Robert Friedland poured billions into critical mineral investments two years ago.
Buying rare earths, copper, lithium, nickel, and platinum projects.
That was at a time when these commodities were sinking to new all-time lows.
But despite that, these heavyweight investors doubled down on their critical metal commitment.
Why did they do it?
Well, the spoils go to those who can stick with these gargantuan commodity trends.
There is no doubt that these mining billionaires know what they were doing.
How can I be so sure?
They’ve made billions from playing this game, from one cycle to the next.
While the commodity might be different each time, ultimately, the rule book is the same.
20 years ago, it was iron ore.
A commodity that was initially slow to respond to China’s rampant growth in the late 1990s.
But once iron ore prices caught up with this gargantuan demand driver, prices went parabolic in the early 2000s!
By 2005, iron ore prices had almost tripled from two years earlier, reaching $US50 per tonne.
And three years after that, iron ore hovered just below $US200 per tonne.
Almost a 10-fold surge in five years!
It begs the question: Do these mining heavyweights see something similar on the horizon among certain critical minerals?
Follow the Billionaire Playbook
These mining giants have attracted their fair share of criticism in recent years. Buying assets when it seemingly made no sense.
Like Reinhart’s pivot into rare earths a couple of years ago.
Or Forests’ decision to buy Mincor Resources ahead of a deep depression in nickel prices in 2023.
But whether it’s intuition, industry connections, or a secret formula for success…
Dismissing those who have laid the path to success in past cycles is a fool’s game.
That’s why I’m always looking to see what the most prominent players in this industry are doing.
What projects are they buying and for which commodity?
One example: For my paid readership group at Diggers & Drillers, we’ve been following the Lundins, a notoriously successful mining family.
They founded Filo Mining and NGEx Minerals, which have uncovered the world’s largest copper-gold discovery within the last decade.
Both companies were in our portfolio… And both stocks soared, despite a lacklustre market for junior miners.
It pays to follow insiders.
They won’t always be right, but odds are the billionaires who have mastered this game (in the past) will be proven correct again.
Investing is a game of probabilities.
Aligning yourself with those with a proven record of success is one of the best ways to stack those probabilities in your favour.
But let’s return to the opportunity today…
The Iron Ore Playbook: Will it be Repeated with Critical Minerals?
In the early 2000s, it was inconceivable that new iron ore projects would get off the ground given the huge capex involved.
But ultimately, rising prices drove investment, and ambitions became a reality.
Today, critical metals face a similar dilemma.
The massive cost of capital to develop mining infrastructure and downstream processing stands in the way of investor interest.
However, in the case of history rhyming, critical metal stocks are positioned like the iron ore developers from the early 2000s.
The precipice of a major upward leg in the commodity cycle, yet hobbled by the enormous cost of capital required to get projects underway.
But just like it did with iron ore in the early 2000s, expect downbeat sentiment to shift rapidly in line with rising prices.
This is how commodity cycles work. This is how inconceivable capex finds its way into new projects.
But don’t take my word for it…
Watch the world’s most prominent insiders and follow their lead!
Regards,
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James Cooper,
Editor, Mining: Phase One and Diggers and Drillers
P.S. Right on cue, copper futures broke into new all-time highs overnight. Everything I’ve been detailing in Mining Memo is coming to fruition right now! Don’t delay, you can access my latest recommendations here.
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