MINING versus TECH…
Two high risk, high reward sectors with a diverse pool of small-cap stocks vying for investor interest.
No doubt, tech has won the popularity contest over the last decade, absorbing the bulk of investor capital.
Risk capital…an arena traditionally dominated by junior mining stocks, now has a new home in tech.
It’s one of the reasons small-cap miners continue to underperform.
But, we can’t blame it all on tech!
In fact, the tech industry may very well be the spark that ignites a resurgence in the small mining stocks.
Now more than ever, the industry needs to innovate.
That will give the sector at least some chance of meeting the vast quantities of copper, silver, rare earths and other critical metals needed to meet future demand.
After all, we live in a consumer-obsessed economy that adds around 1 billion people every 12 years!
Achieving the impossible, means finding enough raw materials to sustain rampant global growth amid a once-in-a-century energy transition.
That task can only take place with colossal innovation in the mining sector.
Where new technologies enable geologists to uncover orebodies.
Or, where metallurgists can unlock novel methods for ore recovery.
But, according to insiders, mining remains stuck in the dark ages…that’s the assessment from mining insider Robert Friedland.
Yet, mining has an ancient history brimming with examples of innovation.
As far back as 7,000 years ago, ancient Sumerians discovered a technique of refining copper ore.
Crushing and heating the rock in a process we now call ‘smelting.’
And several thousand years later, we watched another major leap forward…
Until a few decades ago, modern miners relied on processing techniques not too dissimilar from the ancient smelters.
But to smelt ore you need fresh rock, sulphide ore.
Accessing that rock means digging 50 metres or more below the surface, beyond the weathered zone.
You see, shallow rock tends to oxidise and breakdown, making it unsuitable for processing and is why billions of copper bearing rock was relegated to mining waste dumps.
But that changed in the mid-1980s, following a revolution in copper processing.
Known as solvent extraction and electrowinning (SX-EW), it gave miners the means to economically process shallow oxidised ore.
Simply put, SX-EW uses a process known as leaching…a method of dissolving ‘useful ingredients’ with a solution, using sulphuric acid.
This purified solution then undergoes copper electrolysis.
The breakthrough handed miners a windfall…the weathered ‘waste’ rock was suddenly a valuable resource.
Sitting close to surface meant it was far more accessible and cheaper to extract.
The oxidised ore is also soft and relatively easy to dig up.
Importantly, that means less energy to crush, reducing costs at processing facilities.
Electrowinning was a game changer in copper supply…stockpiles of ‘waste’ rock suddenly entered the global feedstock.
Of course, there are some innovators already pushing mining forward into the modern era…
One of these is developing a technique known as bioleaching, where scientists use microbes to leach valuable metals from sulphide ores.
Using nature to do the work traditionally performed by large scale energy-intensive processing facilities!
No doubt, this will barely scratch the surface in terms of what’s needed for future supply.
But an exponential lift in commodity prices could be the catalyst that drives a new wave of tech innovation in the mining industry.
In fact, mining could be one of the last great frontiers for the tech movement.
A sector RIPE for disruption.
From bioleaching to artificial intelligence, the mining industry is bracing for a tidal wave of new tech that promises an unwinding of the traditional business paradigm.
Tech billionaires are already onboard.
Recognising the problem, Jeff Bezos and Bill Gates recently backed a startup integrating AI in mineral exploration to drive target generation.
The privately held company, Kobold Metals, doesn’t offer an opportunity for small-time investors…but this is an emerging sector to watch.
Editor, Mining: Phase One and Diggers and Drillers
James Cooper has been a working geologist in mines across Australia, Canada, and Africa since the early 2000s. He’s led the operations of tiny explorers through to huge producer outfits. He’s seen booms and busts firsthand and he also understands the cyclical nature of individual commodities. For example, James was right there when Barrick Gold launched an enormous $7.5 billion takeover bid for Equinox. That was the peak of the last cycle.
With his background as a geo and finance professional, he brings a unique insight and experience to Fat Tail Investment Research. He writes the broader resource-focused investing letter Diggers and Drillers and the ultra-speculative explorer-focused trading service Mining: Phase One.