Revealed: Silicon Valley’s Plan to Transform the Mining Industry, by
David Forest, 11/21/18, Casey Research.
Justin’s
note: As we’ve been covering in the Dispatch all this past year, the
commodities sector is gearing up for a record-setting bull run. And our top
commodities analyst David Forest is way ahead of the trend.
Recently, Dave took a trip out to Silicon Valley. There, he made a
surprising discovery about how Silicon Valley insiders are waking up to the
coming commodities bull… and shares the under-the-radar way that you can
profit.
By David
Forest, editor, International Speculator
“Mining?
You mean, like, digging stuff out of the ground? That’s so cool!” said the young
fellow in the sports jacket and track pants.
That’s not usually the kind of reaction I get when I tell people
I’m in the mining business. But then again, I’m usually talking to people
who know the
mining business.
The young fellow in front of me was not one of those people.
He was a tech investor – a member of the Silicon Valley inner
circle that populates the San Francisco Bay Area, where I’d stopped on my way
down to South America to look at copper projects.
But he was very interested in mining – pressing me with questions
about finding and producing metals like nickel and lithium.
After talking awhile, I realized he knew quite a bit about these
metals. In fact, he told me he’d been following these markets closely ever
since he heard Tesla’s CEO Elon Musk talk about them as part of the company’s
earnings conference call.
This wasn’t just academic curiosity. He wanted to know how he
could get investment exposure to metals that firms like Tesla use in the
batteries for their electric vehicles (EVs).
Seeing tech professionals like this interested in an “old world”
business like mining is notable.
Up until recently, metals might as well have appeared from a
Stargate or been created by nanobots in a laboratory, for all the average
Silicon Valley professional knew or cared.
But the EV revolution
is shifting the tech sector’s attention to mining in a very big way…
You see, EV batteries require a lot of specialty metals like
lithium, nickel, and manganese. And these metals aren’t easy to find. Only four
countries on Earth produce lithium in significant quantities: Australia, Chile,
Argentina, and China. Manganese also has a skinny list of sources, which
includes murkier locales like Gabon and South Africa.
So what happens when limited supply meets wildly rising
demand for metals from the EV battery space? After all, the EV battery industry
is projected to grow by 32% yearly for at least the next decade.
Turns out, faced with metals shortages, tech companies started
taking matters into their own hands. April 2018 saw the beginning of an abrupt
pivot in sourcing strategy for tech firms. That’s when Japanese tech giant
SoftBank Group – which manages a $100 billion technology fund – announced it
was buying directly into mining.
SoftBank got into the game by investing $99 million into mining
firm Nemaska Lithium, taking up to 9.9% control of the company. (To be clear, I
don’t recommend buying Nemaska Lithium today… but it shows just how big the
battery metals trend is becoming.)
More important than corporate ownership, SoftBank also has the
right to buy 20% of the lithium supply coming out of Nemaska’s mine each year. These end users were going straight to the source…
And it’s not just SoftBank…A few months later in June, Bloomberg
reported that Apple was in talks to buy battery metals directly from miners.
This shows that even industry giants are worried about access to scarce battery
components.
Geopolitical intelligence platform Stratfor summed up tech’s new
love affair with mining in a July article, saying that “makers and users of the
world’s batteries are scrambling to secure the vital raw materials needed to
produce the lithium-ion cells that will power electric vehicles around the
globe.”
That’s a huge development for the mining business…A tech group like SoftBank single-handedly has
access to capital equal to the amount that flowed into the entire
global mining industry in 2017.
Add in Apple, Tesla,
Panasonic, and other battery makers and users, and the amount of capital
hunting for mining investments becomes absolutely staggering. Not only do tech
firms need metals – they need them from the right places on the planet.
This means countries
that are legally and ethically acceptable, especially to politically correct
peers in Silicon Valley. This means a lot of attention is coming to battery
metals mines and projects in places that are less dangerous, including the
U.S., Canada, Australia, and Finland. Watch for more tech-backed deals coming
down the pipe as Silicon Valley unfolds its plan to revolutionize mining.
I believe tech investors
like SoftBank and others are going to focus on battery metals mining companies
which are in the process of building new mines. For a simple way to capitalize
on this major trend, you can invest in the Global X Lithium & Battery Tech
Fund (LIT). It invests in a broad basket of companies involved in lithium
mining, lithium refining, and battery production. We also have a number of
plays that fit the bill in our International Speculator portfolio,
and we’ll be searching for the very best investments in this space and covering
all the details going forward.
David Forest,
Editor, International Speculator
Norb Leahy, Dunwoody
GA Tea Party Leader
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