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The Base Metal Boom: The Start of a New Bull Market?

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Base metals are the most fundamental minerals produced for the modern economy, and metals such as copper, zinc, nickel, lead, and aluminum are the key components that support sustained economic growth.

During periods of economic expansion, these are the first materials to support a bustling economy, reducing inventory at metal warehouses and eventually their source, mines.

A Base Metal Boom?

Today’s infographic comes to us from Tartisan Nickel and it takes a look at the surging demand for base metals for use in renewable energy and EVs, and whether this could translate into a sustained bull market for base metals.

The Base Metal Boom: The Start of a New Bull Market?

Over the last three years, prices of base metals have risen on the back of a growing economy and the anticipation of usage in new technologies such as lithium-ion batteries, green energy, and electric vehicles:

Cobalt: +232%
Zinc: +64%
Nickel: +59%
Copper: +45%
Lead: +34%
Tin: +36%
Aluminum: +42%

As goes the success and development of nations, so goes the production and consumption of base metals.

Why Higher Prices?

Development outside of the Western world has been the main driver of the base metal boom, and it will likely continue to push prices higher in the future.

China has been the primary consumer of metals due to the country’s rapid economic expansion – and with recent efforts to improve environmental standards, the country is simultaneously eliminating supplies of low quality and environmentally toxic metal production. India and Africa will also be emerging sources of base metal demand for the coming decades.

But this is not solely a story of developing nations, as there are some key developments that will include the developed world in the next wave of demand for base metals.

New Sources of Demand

Future demand for base metals will be driven by the onset of a more connected and sustainable world through the adoption of electronic devices and vehicles. This will require a turnover of established infrastructure and the obsolescence of traditional sources of energy, placing pressure on current sources of base metals.

The transformation will be global and will test the limits of current mineral supply.

Renewable Energy Technology
The power grids around the world will adapt to include renewable sources such as wind, solar and other technologies. According to the World Energy Outlook (IEA 2017), it is expected that between 2017 to 2040, a total of 160 GW of global power net additions will come from renewables each year.

Renewables will capture two-thirds of global investment in power plants to 2040 as they become, for many countries, the cheapest source of new power generation. Renewables rely heavily on base metals for their construction, and would not exist without them.

Electric Vehicles
Gasoline cars will be fossils. According to the International Energy Agency, the number of electric vehicles on the road around the world will hit 125 million by 2030. By this time, China will account for 39% of the global EV market.

Dwindling Supply

Currently, warehouse levels in the London Metals Exchange are sitting at five-year lows, with tin leading the pack with a decline of 400%.

According to the Commodity Markets Outlook (World Bank, April 2018), supply could be curtailed by slower ramp-up of new capacity, tighter environmental constraints, sanctions against commodity producers, and rising costs. If new supply does not come into the market, this could also drive prices for base metals higher.

New Supply?

There is only one source to replenish supply and fulfill future demand, and that is with mining.

New mines need to be discovered, developed and come online to meet demand. In the meantime, those that invest in the base metals could see scarcity drive prices up as the economy moves towards its electric future on a more populated planet.

An extended base metal boom may very well be on the horizon.

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The Carbon Emissions of Gold Mining

Gold has a long history as a precious metal, but just how many carbon emissions does mining it contribute to?

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The following content is sponsored by Nature's Vault

The Carbon Emissions of Gold Mining

As companies progress towards net-zero goals, decarbonizing all sectors, including mining, has become a vital need.

Gold has a long history as a valuable metal due to its rarity, durability, and universal acceptance as a store of value. However, traditional gold mining is a process that is taxing on the environment and a major contributor to the increasing carbon emissions in our atmosphere. 

The above infographic from our sponsor Nature’s Vault provides an overview of the global carbon footprint of gold mining.

The Price of Gold

To understand more about the carbon emissions that gold mining contributes to, we need to understand the different scopes that all emissions fall under.

In the mining industry, these are divided into three scopes.

  • Scope 1: These include direct emissions from operations.
  • Scope 2: These are indirect emissions from power generation.
  • Scope 3: These cover all other indirect emissions.

With this in mind, let’s break down annual emissions in CO2e tonnes using data from the World Gold Council as of 2019. Note that total emissions are rounded to the nearest 1,000.

ScopeTypeCO2e tonnes
1Mining, milling, concentrating and smelting45,490,000
2Electricity54,914,000
3Suppliers, goods, and services25,118,000
1,2,3Recycled Gold4,200
3Jewelry828,000
3Investment4,500
3Electronics168
TOTAL 126,359,000

Total annual emissions reach around 126,359,000 CO2e tonnes. To put this in perspective, that means that one year’s worth of gold mining is equivalent to burning nearly 300 million barrels of oil.

Gold in Nature’s Vault

A significant portion of gold’s downstream use is either for private investment or placed in banks. In other words, a large amount of gold is mined, milled, smelted, and transported only to be locked away again in a vault.

Nature’s Vault is decarbonizing the gold mining sector for both gold and impact investors by eliminating the most emission-intensive part of the mining process—mining itself.

By creating digital assets like the NaturesGold Token and the Pistol Lake NFT that monetize the preservation of gold in the ground, emissions and the environmental damage associated with gold mining are avoided.

How Does it Work?

Through the same forms of validation used in traditional mining by Canada’s National Instrument NI 43-101 and Australia’s Joint Ore Reserve Committee (JORC), Nature’s Vault first determines that there is gold in an ore body.

Then, using blockchain and asset fractionalization, the mineral rights and quantified in-ground gold associated with these mineral rights are tokenized.

This way, gold for investment can still be used without the emission-intensive process that goes into mining it. Therefore, these digital assets are an environmentally-friendly alternative to traditional gold investments.

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Click here to learn more about gold in Nature’s Vault.

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