Doug Goodwille from Kayne Anderson speaks to Drew Meredith from The Inside Network on market thinkers.
While a surging gold price is on hold as the world adjusts to a Trump presidency, all the factors that saw its price rise more than 50 per during his first term in office – trade disputes, fiscal deficits and geopolitical tensions – are almost certainly guaranteed the second time around.
Battery materials in short supply but valuation is key
With the world stepping-up its efforts to decarbonise sooner rather than later, parts of the economy have been pushed into rapid transformation to become sustainable. The knock-on effect of Covid-19 and the Ukraine crisis has brought about supply chain disruptions and skyrocketing demand in the metals primarily used in electric vehicle batteries.
And for those that believe petrol engines and driverless cars are all hearsay; at COP26 last year, leading car manufacturers committed to ending petrol-powered vehicles by 2035. However, according to BloombergNEF estimates, sedan and SUV EVs will be cheaper to produce than equivalent petrol-powered vehicles (internal combustion engines) by 2026. UBS predicts smaller EVs becoming cheaper to produce than petrol-powered versions by 2024. That means you can expect to see electric vehicles flood the Australian market in just two years.
The result?
A battery metals boom driven by soaring commodity demand for the upcoming global electric vehicle demand. Roger Montgomery, founder, and chief investment officer of Montgomery Investment Management, says “the global electric vehicle (EV) market is forecast to grow 10-fold by 2025 and 50-fold by 2030, and with rising demand for energy storage, there’s never been a better time to be a lithium miner. Fortunately, Australia has a number of quality mining businesses for investors to consider.”
“Earlier this year, Porsche, Audi, Skoda and VW owner, the Volkswagen Group’s Powerday, presented the company’s roadmap for battery and charging technology up to 2030. The company had already nearly tripled
“Earlier this year, Porsche, Audi, Skoda and VW owner, the Volkswagen Group’s Powerday presented the company’s roadmap for battery and charging technology up to 2030. The company had already nearly tripled deliveries of EVs in 2020 to over 212,000 and now it intends to deliver a million EVs in 2021 and invest more than €46 billion in EVs over the next five years,” says Montgomery.
If the demand side forecasts are correct, the supply side will require a long list of minerals and commodities that are critical for the further adoption of electric vehicles. Rio Tinto published an interesting table that lists the metals most impacted by new technology. This includes AI and EVs. robotics, renewable energy technology, energy storage and advanced computing.
