From rumours that Biden will cancel Keystone XL on his first day in office to making power-plant emissions extinct by 2035, dramatic policy reversal is upon us. Biden’s first two years in office will be nothing like the last four. The left is supercharged following its dramatic victory in Georgia; and, with control of the Senate is preparing for widespread policy change. Change can be good if positioned properly. Biden’s green dream is creating a silver lining for Canadian investors with a focus on resource plays.
Graphite, Lithium and Cobalt to Lead Green Energy Metal Demand
Reuters asked the question in May of 2020: Which metals will gain most from a green energy revolution? The article contends that the world will need to produce vast sums of minerals and metals to reach the many lofty goals outlined by the left. According to Reuters,
“More than three billion tonnes will be required by 2050 to deploy sufficient wind, solar and geothermal power, as well as energy storage, to have a chance of limiting warming to 2 degrees Celsius by 2100.”
Furthermore, the article highlights the precise metals that will be most in demand:
“Unsurprisingly, graphite, lithium and cobalt are stand-outs with the Bank forecasting potential demand increases of up to 500% from 2018 global production levels.
But the real long-term winners will be more conventional metals such as copper and aluminium.”
Policy Change Driving Metal Specific ETFs and ETNs
The The Global X Lithium & Battery Tech ETF (LIT) is up a whopping 55.40% in the past three months. The index provides thematic exposure to lithium and battery technology and invests in the full lithium cycle, from mining and refining the metal, through battery production.
Nickel related assets are breaking out as well. The iPath Series B Bloomberg Nickel Subindex Total Return ETN which trades under the symbol JJN is up 8.82% year-to-date as investors clamor for exposure to nickel. A new product, issued by Barclays Capital, JJN’s inception date was Jan 17, 2018.
As the US looks to reduce its carbon footprint and go green, certain metals are about to witness a generational boom in demand.
According to the Hindustan Times,
“President-elect Joe Biden will begin his term on Wednesday by signing executive orders to return the US to the Paris Agreement on climate crisis…”
In Biden’s America expect demand to soar for graphite, lithium and cobalt. Also, as mentioned above, the more mainstream metals of copper and aluminium should see steady demand increases into the foreseeable future. From large producers to many junior exploration companies Biden’s policy change is good news.