Electric guzzling EV’s, trucks, trains and busses will soon move billions of people and cargo around this planet each day.
So, what’s the best strategy to play this multi-decade investment theme?
Commodities tied to solar panels, wind turbines, or nuclear plants…does it really matter?
Whichever technology political leaders select, ending fossil fuel reliance means mass electrification.
And the consequences of this are poorly understood.
You see, surging energy demands are already proving a major headache for the early adopters.
As a state, California leads the world in the global race towards carbon neutrality.
According to the Los Angeles Times, ONE IN FOUR new cars sold in California are now EVs.
That’s an all-time high.
But California’s role as an early adopter is presenting problems…a missing link if you like.
According to a recent article in the Wall Street Journal electric powered trucks are being recharged with diesel generators!
The state’s power grid is buckling under the strain from an enormous surge in demand.
That’s what early adoption is showing.
Now add in the impact of extreme weather events and this problem could get far worse.
Heat waves in Australia means dialling up our air conditioning units.
In normal times, power grids are strained but can usually handle demand surges.
But what happens when the millions of cars, trucks and businesses are added into the mix?
Well, again California offers some clues…
According to a report from Politico, 10 days of triple-digit temperatures across California brought the state’s power grid to the brink.
Investigations showed state regulators were preparing forced blackouts right across California.
A state home to the mega-rich, the world’s largest tech firms…a symbol of wealth and prosperity…
Could barely keep the lights on!
That would have been deadly for the sick and elderly.
It would have been political suicide for California’s governor, Gavin Newsom.
But it offers a timely reminder…power networks built during the ‘age of oil’ are not designed for mass electrification.
California is a posterchild for the green energy movement, yet this early adopter is painting a rather major flaw in the world’s attempt to reach Net Zero.
As I wrote to my Diggers & Drillers subscribers recently…
‘Net Zero is preoccupied with energy generation…whether that’s solar panels, wind turbines or nuclear.
‘It’s also heavily focussed on transport…EV’s.
‘But very few have considered the limitations of the existing energy grid…The critical link that connects power generation to the end consumer.
‘The nuts and bolts of the green energy movement.
‘Bloomberg NEF, estimates nations will need to spend at least US$21.4 trillion to upgrade their existing grid networks.
‘A sum that’s equivalent to the United States entire annual GDP.
‘Existing grids are not designed to support the huge power demands coming from an electrified economy.’
Power grids might not have the same appeal like a sleek Tesla or fast action lithium stock…
But the potential windfalls from this megatrend should have you excited.
But what’s the best investment angle?
Utility stocks owning the grid networks?
Engineering contractors set to re-build the infrastructure?
They might do well.
But investing in the copper miners supplying the raw materials in this US$21 trillion megatrend is a leveraged bet to gain maximum upside.
Thanks to its supreme ability to conduct electricity and form minute strands of wire…
Copper remains the key metal in electrification.
Things look increasingly optimistic for this metal too.
2023 has been a year of poor sentiment…
A slowdown in Chinese housing construction, persistently high inflation, concerns of global growth and looming recession in the west…
A tidal wave of bad news that should be sending copper prices lower.
Yet, the commodity is up more than 7% over the last 12 months!
It’s why I believe the window of opportunity is closing on steeply discounted copper plays.
For all these reasons, you should have copper stocks on your radar.
But is Australia the best place to invest?
There are some solid ASX-listed opportunities.
Yet, Australia is a minnow when it comes to copper production. The choices here are limited.
In fact, it only produces around 4% of global supply.
If you’re looking to capture the biggest opportunities, you must seek out the companies holding the world’s largest deposits.
That’s what our latest recommendation at Diggers & Drillers has done…
A giant copper, gold, silver resource.
One of the largest of its kind anywhere in the world.
But the really exciting part is this…
In April 2023, the company drilled untested ground less than 10 kilometres from its flagship project.
The first hole returned 60m at more than 5% copper.
Plus, 2 grams per tonne of gold, AND 44 grams per tonne of silver.
At the time it only had the capacity to drill eight holes…every hole returned strong thick grades.
But the company hasn’t had the opportunity to follow up this potential discovery….
Investors have eagerly waited more than six months to get rigs back over this target.
With a fully funded drill program underway, the company could be on the verge of adding a SECOND major copper deposit to its coffers.
And we won’t need to wait long for the results…
Lab assays from the drilling are expected before the end of 2023.
This is an exciting time for the company and its investors…an opportunity to be involved in a major discovery.
Full disclaimer, there’s no guarantees this will happen!
The initial drill hit from April might have been a vein or some kind of small-scale geological feature…a false positive if you like.
But this is a proven discovery area.
A large-scale porphyry deposit sits just 10km from the target area.
Another major deposit owned by a neighbouring company also sits next door.
The company has a sniff of what lies below, it now has the means to fully understand it.
This is how BIG discoveries start.
If there was ever a time to get on board, now is the time to do it!
If you’d like to learn more and access the name of the stock, you can do so here by joining Diggers & Drillers.
Editor, Fat Tail Daily