The Rush to Secure Critical Minerals Grows

Yesterday, Selva told you all about why lithium could remain a hot commodity in 2023.

If you missed her article, I’d urge you to check it out for yourself. You can access it right here.

Because, in my view, I also share Selva’s outlook. Despite the concerns and critics, it is hard to envision a market that is not bullish for lithium and other critical battery metals right now.

The fact of the matter is that the energy transition is not slowing down, even if the global economy might be. I wouldn’t even be surprised if a slowdown hit supply harder than demand. After all, we’ve seen hefty underinvestment in new projects for a lot of commodities recently.

When it comes to lithium, this struggle to actually get the stuff out of the ground is very apparent when you look at global production. Take this chart, for instance:

This shows the discrepancy between how much lithium each nation is known to have (orange) and how much it actually produces (blue). As you can see, Australia is the top dog when it comes to output, producing just over half of the world’s total lithium supply.

But despite our strong efforts, the real lithium output will need to eventually come from South America. The challenge for nations like Bolivia and Argentina, though, is getting mining operations up and running because that requires large sums of upfront capital.

And that’s where some keen investors could tip the scales…

Big money goes big on critical minerals

The only way South American lithium is going to reach the market is via outside investment. And as the demand for these critical minerals grows, expect these investments to come in thick and fast.

Just overnight, for example, we’ve learned that Saudi Arabia is putting together a new mining fund for critical minerals. Overseen by State-owned mining firm Ma’aden, the Kingdom is set to pledge US$15 billion to overseas assets over the next few years.

Would they really take a chance on something as risky as Bolivian or Argentinian lithium projects, though?

Maybe not immediately, but according to the Financial Times, the fund has already been in talks with Brazilian miner Vale. They report that the Saudis are keen to gain a foothold in nickel, copper, and cobalt assets.

So, I certainly wouldn’t rule out the possibility of lithium investments down the road. And they’re not the only nation showing keen interest in offshore assets.

India is also apparently exploring options for investment in copper and lithium projects to secure access to the minerals for itself as well. And they have already been directly linked with interest in Argentina for some long-term leases, according to reports from Mining.com:

‘“A team of experts has already studied the technical aspects of the one copper and two lithium mines in Argentina by visiting the sites,” said one of the sources.

‘“Now, we will start the commercial assessment, and that will take about a couple of months.”

‘The effort is part of India’s wider push to secure critical metals and minerals from top world producers, the sources said.’

This is hardly surprising given the rapid growth trajectory of India itself. They are quickly and somewhat quietly becoming the next major economic superpower — just like China was back in the late ‘90s and early ‘00s.

And it seems they realise that just like China’s path to ascension, raw materials are going to be vital to achieving long-term growth — a fact that Aussie investors will know all too well and should be prepared to take advantage of.

A scarce future

All of this inherently ties into the bigger idea of an ‘Age of Scarcity’ that my colleague, James Cooper, has been talking about for a while now. Because as a former geologist, he can see the writing on the wall in terms of not only underinvestment but an underappreciation for key commodities.

That includes but certainly isn’t limited to lithium.

We’re talking about a much more widespread mining boom — something that James himself explained at the tail end of last year.

You can read his two-part explainer on his forecast for the new mining boom here and here.

The one point I want to drive home to you is that we’re already seeing this scarcity problem unfold. As the moves from the Saudis and India show, the race is on to secure access to critical minerals — especially for nations that don’t have any natural deposits themselves.

That’s what makes the lithium trend so resilient, despite its critics.

It’s why we’re likely to see a new mining boom arrive.

And most importantly of all, it’s the reason Aussie investors need to take it seriously.

These sorts of investment opportunities don’t come along all that often. So, when they do, you need to be prepared to act.

If you’re unsure how to get started or simply need to be pointed in the right direction, well then, James is your man. To hear what he has to say and how he can help you navigate the intricate world of commodities, click here.

Because as investment in critical minerals continues to ramp up in 2023, you won’t want to be someone who misses out.

Regards,

Ryan Clarkson-Ledward,
Editor, Money Morning

Ryan is also co-editor of Exponential Stock Investor, a stock tipping newsletter that hunts down promising small-cap stocks. For information on how to subscribe and see what Ryan’s telling subscribers right now, click here.