The trade war between China and the U.S., tensions between Russia and the West, the green energy transition — today’s political, geopolitical and economic pressures have significant implications for resource development. In a new piece on his blog, ARPN expert panel member and president of President of House Mountain Partners, LLC Chris Berry discusses “[t]he Strategic Metals Supply Chain in an Era of De-globalization.”
Setting the stage by using the examples of Lithium, Cobalt and the Rare Earths, Berry argues that while in his research “drivers of the macro economy have historically either been political or economic in nature, but rarely both at the same time,” the current resource policy and investment climate is different today as a “confluence of macro-economic and political forces are converging all at once to place investors and corporations at a unique crossroads vis- à-vis investment along the strategic metals supply chain.”
Berry outlines what he considers the current drivers of overall investor sentiment in the markets and outlines how the convergence of these drivers is spooking corporate capital expenditure decisions, with the trade war between the U.S. and China being the first of many. As an expert focused on the field of energy metals, Berry acknowledges however, that “this doom and gloom does mask some very positive longer-term dynamics around the energy metals/EV thesis,” and that justifying a “long-term bearish thesis” would be difficult.
In fact, he says, “the dismantling of the existing global trading system and its eventual replacement is exactly what you’d want to see as an investor along the strategic metals supply chain,” and sees a “unique opportunity for project-level investment.”
Berry, who will elaborate further on the economic, financial and geopolitical aspects of the energy transition in a forthcoming book set to publish in 2020, concludes with an appeal for “strategic thinking on the parts of Western governments, corporations, and other stakeholders” as “the societal, economic and national security implications” surrounding the electrification of transportation and energy storage “are simply too significant to ignore.”
Click here to read the full piece.
