Investors are right to wonder whether we are on the cusp of another commodities supercycle and how that pertains to mining stocks. We’ve seen massive inflation of late, at levels not reached in four decades. Gas prices spiked not long ago and currently remain high. Lithium prices rocketed as EV firms couldn’t get enough for batteries. And the list goes on.
Now, we’re not quite at supercycle levels, which require a combination of surging supply, demand, and prices. But the clean energy boom could create the next commodities supercycle. That means investors should consider commodities and mining companies providing that growth.
Let’s look at a few such firms that specialize in nickel, copper, and rare earth metals production, in order to capitalize on that growth.
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Freeport McMoRan (FCX)
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Freeport McMoRan (NYSE:FCX) is the world’s largest producer of copper. The firm produced 1.53 million metric tons of copper in 2022, making it the biggest copper miner ahead of other larger firms that also mine copper.
Copper is integral to the green energy push for a few important reasons. It’s reliable and it’s efficient. Copper conducts heat and electricity extremely well, which means lower energy losses throughout the process overall. If you’ve ever looked at an electric motor like those found in wind turbines and electric vehicles, you probably have an idea of how much copper is used. In short, these technologies require a lot of copper, meaning demand for this metal should continue to be high as those industries continue to grow.
That’s a massive boon to Freeport-McMoRan which produced 965 million pounds of copper and sold 832 million tons in the first quarter. The company also produces significant quantities of gold and molybdenum, which are also vital to key sectors set to benefit from electrification.
Norilsk Nickel (NILSY)
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Norilsk Nickel (OTCMKTS:NILSY) is the largest producer of nickel globally. It also happens to be the largest palladium producer as well. Nickel is used in the manufacture of EVs, wind turbines, and nuclear power plants, all of which are important to green energy initiatives. Palladium is used in fuel cells, but is most important in making catalytic converters for vehicles.
Currently, the great majority (roughly 69%) of nickel is used to manufacture steel. Nickel adds strength and corrosion resistance at high temperatures. But it has also become increasingly important in the manufacture of lithium-ion batteries and renewable energy storage.
Nickel-based lithium-ion batteries offer the highest energy density, so nickel will continue to be in demand. Nickel is also required for solid-state batteries that may replace current battery technology in time. Nickel may be the next metal to pop, similar to how lithium has exploded higher.
Norilsk Nickel is a safe play for investors looking to capitalize on a future nickel supercycle.
MP Materials (MP)
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MP Materials (NYSE:MP) has the possibility to become one of the most important U.S. companies. It produces rare earth metals that are vital to decarbonizing energy production. Notably, this company is also the only integrated North American rare earth mining and processing firm.
MP Materials operates Mountain Pass in Nevada. The site was the primary global source of rare earth metals from the 1960s to the 1990s. China usurped that position, and MP Materials took the site over in 2017. In 2022, MP Materials produced 15% of all rare earths consumed globally. In 2022, the company recommissioned processing facilities at Mountain Pass. Prior to that, the concentrate mined at the site had to be shipped to Asia for processing.
The company’s next step is to manufacture rare earth metals and permanent magnets which will require further manufacturing capacity. The narrative here is crystal clear – MP Materials is a geopolitically-important firm that could become hugely important to U.S. industry and re-shoring efforts.
On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Alex Sirois is a freelance contributor to InvestorPlace whose personal stock investing style is focused on long-term, buy-and-hold, wealth-building stock picks. Having worked in several industries from e-commerce to translation to education and utilizing his MBA from George Washington University, he brings a diverse set of skills through which he filters his writing.
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