You can find a good deal even in a terrible market.
Just follow the right trend.
Despite the market turbulence we’re in, funds are still flowing into several sectors. Investors haven’t stopped putting money into some of the most exciting opportunities.
You won’t hear much about it in the mainstream media, however.
But here at the Financial Star, we pay attention to the most important megatrends. Some of them aren’t immediately visible.
But they are there, and investors who understand them better than others could have an advantage.
If you look beyond the day-to-day noise, you will find billions of dollars flowing into the critical minerals industry.
Critical minerals are the minerals used to power the green energy transition, such as lithium, copper, nickel, cobalt, and others.
No matter how bad the economy may seem, this industry will continue thriving. Smart investors are paying attention.
Last week, one of these “smart money” groups funded a $659 million Initial Public Offering (IPO) of a nickel company from Indonesia.
Harita Nickel is one of the largest nickel producers in the country and is looking for expansion.
The company plans to boost its nickel output from 55,000 tonnes to 120,000 tonnes a year.
Essentially, this move would more than double the company’s production of special battery-grade nickel that goes into electric vehicle (EV) batteries, which are critical for the global decarbonization push.
Another Indonesian nickel company, Merdeka Battery Materials, decided to go public earlier this year. The company plans to IPO in April with an initial target of $580.3 million for 10.24% of the company.
Given the success of the first deal, we expect a lot of investor interest in Merdeka’s offer.
This deal will bring the total investment into the Indonesian nickel industry to over $1.2 billion.
A $1.2 billion investment into one of the most crucial metals for green energy transition isn’t much, however. But it’s a reminder that while some investors are “sitting it out” or panicking, the “smart money” is making bold moves.
Western Nations Have to Keep Up With Critical Metals Rally
The deals we mentioned above are taking place in Indonesia… The nickel it produces could be shipped to China and used in Chinese-made EV batteries.
The White House wants to secure its own supply of critical minerals and build critical materials supply chains based in “friendly” nations.
Biden’s Inflation Reduction Act (or IRA) has outlined $437 billion in total investment and incentives.
The bill aims to secure the supply of critical elements, such as nickel, lithium, copper, and others, from domestic sources.
The bill will also fund companies that work in the Free Trade Agreement (FTA) countries.
These are the “closely aligned” nations that are politically similar to the US, such as Canada.
And these funds are going into supporting various aspects of the country’s critical minerals supply chain.
Last week, the Department of Energy (or DoE) announced $3.5 million in funding for a battery recycling start-up. The company has established a way to extract critical minerals from end-of-life batteries for future re-use.
At the same time, Canada also budgeted C$21 billion (USD15.5 billion) to support the critical minerals industry.
The country plans to invest this much over the next five years and possibly expand the funding to C$80 billion (USD59 billion) up to 2034.
The race to secure critical minerals is on. The companies exposed to these commodities will be the primary beneficiaries.
Thank you for your loyal readership,
The Financial Star team