Which Miners Are Equipped to Supply the Green Transition?
Metals like copper, lithium and nickel are increasingly important as demand soars for batteries, EVs and solar panels. But which stocks offer exposure to this demand? This article discusses the topic with reference to Freeport-McMoRan Inc (NYSE: FCX), Albemarle Corporation (NYSE: ALB), Vale SA (NYSE: VALE) and Vortex Metals Inc (TSX.V: VMS).
Vortex Metals Inc (TSX.V: VMS) provides exploration and mining services, with a focus on copper and gold projects.
A recent update showcased Vortex Metals Inc’s Riqueza Marina Volcanogenic Massive Sulfide (VMS) project in Mexico, a potential significant copper source. The project comprises three mineral leases close to paved roads, power and a deep-water port.
The project’s rhyolite dome target is a priority due to the scale and strength of the geophysical anomaly. Additionally, surface sampling identified “extensive exposures of oxidized copper-gold mineralization that can be interpreted as potential extensions of sub-surface mineralization”.
Vortex Metals Inc is planning additional surface studies and says it is making strong progress towards securing drilling permits.
Vortex’s projects were personally curated by the late David Jones, a renowned geologist who believed they could be his next big discovery. Jones previously discovered the successful Los Filos mine, where there is over 7 million Oz of gold and 5 million Oz of silver, while he was Teck Resources’ senior geologist.
Vortex Metals Inc CEO, Co-Founder and Director, Vikas Ranjan, commented: “The previous exploration conducted to date by late David Jones provides Vortex with multiple outstanding targets that have been identified. Given the size of the anomalies to date and grades we are seeing at surface we feel Riqueza Marina presents a unique opportunity”.
Vortex boasts of a marquee technical team, that includes renowned VMS expert Dr James (Jim) Franklin, a mining hall of famer, as senior technical advisor. With projects progressing and a stellar team in place, the company will be hoping that copper demand will accelerate following a dip in prices.
This hope could be fulfilled, with John LaForge, Head of Real Asset Strategy at Wells Fargo, recently commenting: “The market is just reflecting the immediate concerns. But if you really thought about the future, you can see the world is clearly changing. It's going to be electrified, and it's going to need a lot of copper.”
Freeport-McMoRan Inc (NYSE: FCX) is an international natural resources company which operates large, long-lived, geographically diverse assets with significant reserves of copper, gold, molybdenum, cobalt, oil and gas.
Freeport-McMoRan Inc owns some of the largest copper mines in the United States, with its seven open pit operations including the Morenci, Safford and Sierrita projects.
The company’s most recent earnings update showed copper and gold sales volumes which were above April 2022 guidance by 5% and 18%, respectively. Meanwhile they were also ahead of the same quarter in 2021 by 17% and 56%, respectively.
Commenting on the results, Freeport-McMoRan Inc Chairman and CEO, Richard Adkerson, said:
“Our assets are valuable and scarce. The future prospects for our markets, the quality of our assets and the experience of our team will enable us to deliver substantial value as global conditions improve.”
However, Freeport-McMoRan Inc still faces challenges. For example, planned expansion works at the company’s Grasberg copper mine in Indonesia have been delayed by around two years due to geological changes.
This change, in addition to news of COVID-related difficulties, came alongside news that the company had trimmed full-year production guidance. Even so, the business remains confident it can take advantage of high demand for copper.
Albemarle Corporation (NYSE: ALB) produces specialty chemicals. The company offers plastics, polymers, and elastomers, as well as cleaning products, agricultural compounds, pharmaceuticals, photographic chemicals, drilling compounds and biocides. The business focuses on lithium, bromine, refining catalysts and applied surface treatment.
Albemarle Corporation’s most recent earnings saw the business announce plans to build integrated lithium operations in the United States. These include projects at the Kings Mountain, North Carolina, as well as a spodumene mine and a lithium conversion plant in the southeast.
Even without the impact of these future projects, the company expects full year lithium volume to grow by between 20% and 30% due to increased capacity.
The company is attempting to expand its operations at pace, with developments including plans to increase the size of its Silver Peak lithium production facility. The project in Nevada faces objections from some segments of the local population who are concerned about its impact on the environment.
On a related note, the company has recently urged the US government to make it easier for domestic producers to transport their lithium to market. Albemarle Corporation is clearly hoping to gain an edge on Chinese lithium producers who currently dominate the market.
Vale SA (NYSE: VALE) produces and sells iron ore, pellets, manganese, alloys, gold, nickel, copper, kaolin, bauxite, alumina, aluminum and potash. The company is based in Brazil, where it owns and operates railroads and maritime terminals.
The company’s second quarter earnings update saw nickel and copper production both decline compared to the corresponding period last year. Nickel production fell by 16.1% and copper by 23.9%, though Vale SA attributed these declines to planned maintenance programs.
With that being said, Vale SA has since upped its guidance for nickel production from between 200,000 and 220,000 metric tons to 230,000 to 245,000. Its focus on the metal is a sign the business is looking to take advantage of increasing demand as the rise of technologies such as the EV continues.
However, it’s worth noting that the business has suffered damage to its reputation in recent years. For example, 2015 saw the collapse of a waste reservoir operated by Vale's subsidiary, Samarco, in the town of Mariana. This has seen the company having to pay significant damages.
A separate tailings dam disaster from 2019 resulted in 259 confirmed deaths and resulted in Vale SA taking a $7bn hit for reparations for those affected by the incident.
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