How to make a mint from the next mining boom

Avoid the metals producers and invest in companies with the tools and technology to help the sector boost output and reduce its environmental footprint.

miners
(Image credit: getty images)

The mining sector has a mixed reputation when it comes to its impact on the environment and investors’ wallets. As Mark Twain (who promoted and invested in the industry) said, “A mine is a hole with a liar on top”. But there is no denying that modern life requires the metals and minerals the sector extracts from the ground – especially given the demands of the energy transition. The good news is that changes in technology, especially with respect to satellites, artificial intelligence (AI) and automation, are transforming the efficiency and sustainability of the industry, as well as creating investment opportunities that do not depend on the success of an individual mine or project. 

Net zero is turbocharging demand
The global economy has always relied on a steady supply of metals and minerals to provide the raw materials for the goods we buy. But Olivia Markham, co-manager of the BlackRock World Mining Investment Trust, thinks that demand is about to be turbocharged by the drive to reduce carbon emissions. She notes that the adoption of low-carbon technologies will play a key part in most countries’ efforts to achieve net zero. For example, one of the key measures of 2022’s Inflation Reduction Act in the United States, was a $7,500 tax credit aimed at encouraging people to buy electric cars. The adoption of such technologies will in turn increase the need “for the mined commodities that are required”, says Markham. These include the lithium used in batteries, copper in the motors, wiring and in charging stations and other rare-earth minerals. She thinks that, if anything, the market is underestimating the speed at which our need for such commodities will grow. This boom in demand will be particularly powerful as it arises in the context of recent underinvestment by mining companies, who have focused on “paying down debt, reducing costs and returning capital” instead of building new mines, creating “a mismatch between supply and demand”. 

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Dr Matthew Partridge
Shares editor, MoneyWeek

Matthew graduated from the University of Durham in 2004; he then gained an MSc, followed by a PhD at the London School of Economics.

He has previously written for a wide range of publications, including the Guardian and the Economist, and also helped to run a newsletter on terrorism. He has spent time at Lehman Brothers, Citigroup and the consultancy Lombard Street Research.

Matthew is the author of Superinvestors: Lessons from the greatest investors in history, published by Harriman House, which has been translated into several languages. His second book, Investing Explained: The Accessible Guide to Building an Investment Portfolio, is published by Kogan Page.

As senior writer, he writes the shares and politics & economics pages, as well as weekly Blowing It and Great Frauds in History columns He also writes a fortnightly reviews page and trading tips, as well as regular cover stories and multi-page investment focus features.

Follow Matthew on Twitter: @DrMatthewPartri