This transition consequently is likely to drive a surge in demand for critical minerals that are vital for these technologies.
It might seem counterintuitive for ethical investors to invest in mining. Mining is an industry with a long history of human rights abuses and ecological damage.
For us to avoid the mistakes of the past and allow everyone to prosper sustainably, materials for the energy transition should be extracted with the consent of communities, responsible business practices, and laws that safeguard people and the planet.
These are the main minerals and metals that are predicted to power the energy transition and the companies that produce them.
Earns the majority of its revenue from lithium, including the Mount Marion lithium mine, which contains the world's second-biggest high-grade lithium mineral resources
Mainly mines lithium and iron ore, but it is exploring for gas
A company engaged in the discovery, acquisition, exploration and development of lithium and nickel
It owns 2 lithium assets, owning a 51% stake in the Greenbushes Lithium mine and a 100% stake in the downstream processing refinery at Kwinana, creating battery grade lithium hydroxide
Mining giant mainly producing iron ore and aluminum, but recently moved into lithium by acquiring Arcadium Lithium
However Rio has a reputation for environmental destruction and human rights violations
Copper
In the IEA’s scenario, the share of global electricity generated from renewables needs to grow from 30% today to nearly 90% by 2050, mainly by growing solar and wind.
Copper is crucial for the continuing rollout of solar PV, a widely adopted energy source in Australia, where 1 in 3 homes have solar panels.
Minerals used in clean energy technologies compared to other power generation sources. Source: International Energy Agency
According to the International Energy Agency (IEA), if we want to reach net-zero by mid-century (2050), the demand for copper could possibly by rise 50%.
The following companies have a big focus on copper.
A global resources company with operations in iron ore, copper, coal, petroleum and nickel
It earns 25-30% revenue from energy transition minerals, including from the Olympic Dam Mine in South Australia, containing the 4th largest deposit of copper in the world
BHP is also one of the largest global polluters since the Industrial Revolution and has been responsible for a number of environmental and human rights disasters
Australian-based miner that operates copper and gold mines in Western Australia, Spain, the US and Botswana
Major revenue source is copper for which demand is expected to grow to meet the need for more renewable energy and transmission lines.
Rare earths
Rare earths are a group of 15 elements that are key enablers for technologies looking to lower emissions. They’re used in permanent magnet motors, which convert the electricity stored in a battery into motion, for example, wheels on a car, or motion into electricity, such as on a wind turbine. The IEA predicts demand for rare earths could increase significantly by 2040 if the world is on track for net zero emissions.
China has a monopoly on rare earth mining, producing 85% of the market in 2016 and Australia is the next largest producer with 10% of the market.
The following companies specialize in mining them.
An Australia-based company engaged in the exploration, mining and marketing of mineral sands and rare earths
Iluka’s mining and processing operations are located in South Australia and Western Australia, and it is trying to build Australia’s first rare earths processing facility
If you wanted to invest in a range of the minerals and metals companies listed in this blog, the following two ETFs target this theme:
Betashares Energy Transition Metals ETF (ASX: XMET)
Invests in mining companies across the globe producing copper, lithium, nickel, cobalt, graphite, manganese, silver and rare earth elements
Companies in the fund largely operate in Canada, the US, Australia and Chile
The information in this blog is general in nature only and based on SIX's internal research. We haven’t taken any individual person’s needs or objectives into account when preparing this information. As always, do your own research or seek personal financial advice before making any investments or financial decisions.
