Insights

Demand for electricity over the next decade will put pressure on the U.S. power grid to keep pace. New investment in power-hungry industrial facilities is driving demand, especially the data centers that support artificial intelligence (AI), U.S. reshoring initiatives and the steady electrification of the transport sector.

Renewable energy is rapidly replacing fossil fuels as costs decrease and efficiencies improve with increased deployment, making it much cheaper than traditional energy sources. This shift, driven by the exponential growth of renewables, electrification, and efficiency, is expected to significantly alter global power dynamics as fossil fuels are phased out.

The fourth industrial revolution (4IR) is driving unprecedented change. Its dominated by AI, robotics, IoT, genetic engineering and quantum computing. 4IR technologies need critical minerals, fueling a new commodity supercycle.

The rise of AI and data centers will boost global electricity demand, challenging power grids but benefiting clean energy sources like nuclear. This trend will also increase demand for copper.

The era of renewable energy is emerging and beginning to reshape power generation. Recent trends suggest that this is a fundamental transformation powered by the fall in renewable energy costs. 

The long-term trajectory for EVs is positive despite the recent slowdown. Lithium-ion batteries (LIBs) are the preferred battery technology for EVs, thanks to their superior technical properties.

As the U.S. advances in its pursuit of clean energy, it is strategically redirecting its energy security emphasis from oil to critical minerals, and diminish the influence of oil geopolitics and petrostates such as Russia.

Uranium's performance helped the energy transition complex close higher in September. From a macro outlook, solar panels are emerging as a critical player in the global energy transition. 

Uranium had a strong August, contrasting with the decline of most energy transition metals due to China's economic troubles. The investment capital spurred by the U.S. Inflation Reduction Act (IRA) is turning the U.S. into a cleantech powerhouse.

The U.S. power grid desperately needs modernization. This is driving the development of energy storage systems and V2G (vehicle-to-grid) technology and is a major copper demand driver. 

Energy transition metals miners posted strong results in June, with uranium mining equities leading the group. The U.S. is entering the early stages of a manufacturing supercycle driven by massive energy transition investment.

Lithium and lithium miners staged a sharp rebound rally in May and were the positive exception among critical minerals. The sector was weighed down by China's faltering recovery, ongoing global growth concerns and the U.S. debt ceiling drama. 

The long-term secular growth outlook for energy transition materials got several boosts in April. Chile's decision to nationalize its lithium reserves reinforces the metal's role as a global strategic economic asset. 

As deglobalization accelerates, unfettered access to critical minerals is not likely to last. The old system of free and fair access to commodities, including critical minerals, is moving toward one marked by interregional competition, and unstable availability and pricing.

As the global energy transition "arms race" heats up, the drive to secure supply is fast becoming more important than price. All signs indicate the 40-year bond bull market has likely ended and the next great secular bull market in commodities has begun.

We believe we are in the early stages of an energy transition materials secular bull market and favorable supply-demand dynamics are likely going forward. The upward revision in global growth, the timing effect of the China credit impulse and the surprise ending of China's zero-COVID policy have provided a tailwind for the metals market.