- Hodes Weill
Hard Rock and Heavy Metal
By Mark Rudovic, Principal and Head of Real Assets
Up until the mid-2010s, the share of clean energy technologies driving demand for metals and minerals had been minute. However, over the last decade, clean energy technologies have become one of the fastest growing segments of demand for most metals and minerals due to government and corporate decarbonization targets. Power transmission and distribution need copper and aluminum. Wind turbines require zinc and manganese. Electric vehicles (“EVs”) demand nickel, lithium, and cobalt.
The IEA estimates that reaching goals of the Paris Climate Agreement would require a quadrupling of mineral requirements for clean energy technologies by 2040, while hitting net-zero, globally, by 2050 would require an approximate sixfold increase in production compared to current levels. Even energy transition cynics will concede that traditional base load power generation like nuclear (nickel, chromium), natural gas (copper), and coal (cobalt, nickel) are also demand centers for minerals.
Mining is one of the most capital-intensive sectors in the world, and as a function of this, the mining cycle is primarily driven by the availability of capital to fund projects and build supply. Capital availability is mainly driven by sentiment, which moves back and forth between bullish and bearish depending on the market environment and fundamental drivers of demand, which have historically been linked to: (i) population growth, (ii) the industrialization of emerging economies, (iii) urbanization, and (iv) infrastructure spend.
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