Trends such as the rise of electric vehicles (EVs) and the increase in demand for renewable energy, in which copper is a key conductor in areas like wind turbines, are adding to global demand for the red metal. This widespread need is a potential income boon for the countries that mine it, like Chile (the world’s largest copper producing country), Peru, Mexico and Indonesia.
Copper is not the only metal feeling the effects of the green energy movement, many commodities are beneficiaries of the growing adoption of renewables and accompanying technological advancements. Metals such as nickel, lithium and cobalt are essential components in battery technologies. While mining in such commodities are global, emerging markets such as Russia, Argentina, China and the Democratic Republic of Congo, have a dominant position.
There are select opportunities in commodities as a result, despite the current short-term uncertainty thanks to trade tensions and creeping investor wariness of a market downturn. However, on a longer term view as brown energy becomes more expensive and as green becomes an increasingly mainstream substitute, commodities linked to next-generation energy will likely experience a tail-wind.
Robin Wehbé, portfolio manager, Mellon.