It’s Not Too Late To Invest In The Resources Boom: Ideas For 2023

30th Jan '23 by Megan Boxall

25 comments 3765 reads

In this article:

Why the mining sector is more appealing to generalist investors than it has been in the past (hint: it’s associated with the tech sector and the green energy revolution)
How the long-term demand for certain resources is obscured by short-term supply trends
What you need to know about how the cyclicality of mining and the timing of capital expenditure projects affects returns
Which miners are worth taking a closer look at in 2023

I have never given the resources sector the attention it perhaps deserves. I like to invest in (and write about) companies which make exceptional profits off products and services which the world relies on. Mining, which is capital intensive and at the very bottom of the supply chain, is about as far removed from my sphere of interest as it gets.

But I also love to research companies that are genuinely investing in making the world a better place - renewable energy or next generation healthcare, for example. In 2023, with high-growth stocks in free fall, the resources sector has become a far more attractive way to gain exposure to hot trends like electric cars and the green energy revolution.

And so I have endeavoured to become better acquainted with the sector in order to give myself a fighting chance of unearthing (no pun intended) opportunities. My thanks to Keelan Cooper, for patiently sharing his experience of investing in the sector.

Demand dynamics: The need for raw materials

In this section:

Technological progress is expected to have a big impact on the energy, healthcare and industrial markets in the coming decades
Minerals extracted from the earth will be crucial to powering the tech of the future

Some of the world’s pessimists say that the human race has not put its technological prowess to good use in the last few decades. In his book The Rise and Fall of American Growth, Robert Gordon imagines the surprise a person who fell asleep in the 1870s and awoke at the dawn of the second world war would have in seeing the telephone, the lightbulb, cars and x-rays. Whereas one who took a nap in 1940 would not be introduced to anything completely new when they woke up in the early 2000s.

I consider myself one of those pessimists. In the last…

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Archdoor

30th Jan '23

Sylvania Platinum with an AISC of $6.46/oz ? Yes please!

Rusty2

How do you invest in Graphite? I see there is Tirupati Graphite (LON:TGR) listed.

I thought this interview was interesting:

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dunns_river_falls

Andrada Mining (LON:ATM) : Soon to be the only producing lithium company on AIM. And they are producing the lithium at an AISC of $0. The lithium has been dumped in tailings up until this year when they have built the lithium plant. Main product is tin which they now produce 720t per year, that's what pays the bills at the current £30k/t, but the lithium is the game changer.

Snowbum

I wondered why I hadn’t heard of them…. I see it’s Afritin with a new name. I think with small cap miners it’s important to make distinctions between producers & explorers, money is made by being in at the right relative stage. Just now imo, producers are the place to be, the more speculative explorers will spike at some point but I don’t anticipate that any time soon. Just my thoughts.

Samsgrandad

31st Jan '23

Nice article but a couple of points from the intro. 1, you can't create energy, only change from one form to another.
2, Major change you overlooked in 1949 was the invention of the transistor which led to integrated circuits and very large scale integration and modern computers, TVs etc.

Bristolian

Many thanks Megan. As others have commented, it's great to see an article on resource stocks on Stocko as that is a major gap In its overall analysis in my view and represents an area that my investments are currently weighted towards. . There are lots of paid marketing companies in the sector and it's difficult to get independent analysis and see the wood from the trees. I'm looking forward to the next article on this sector.

Epitychia

Great article.

Guybrush

Thanks Megan, your articles have much improved since your very first ones where perhaps you were quoting too much metric data from Stockopedia, something we are able to find ourselves. In fact, I like your articles even more than the others now. Would you consider doing some similar research into oil and gas stocks as you have done here for mining?

BnB

Good article Megan. The thought I would add is to look at the picks and shovels plays on resource mining, companies like Weir but also, of higher quality and larger scale, Caterpillar, Sandvik and Epiroc, all of which have rebounded hard from the October lows, like much else. As a buy and forget investment for the next 20 years, I would have thought these were a less volatile and lower risk choice to play the theme. But seekers of value will have to wait for a dip, which may come shortly.

Peter John

Great article. It amazes me that anyone takes the LME seriously but that’s another matter after they let slide the blatant manipulation of Nickel. Suggest there are three producers of Lithium Hydroxide, this is the product. Australian stocks PLS, MIN, IGO, AKE. These companies currently produce more than 30% of world demand. Cheers.

bullhead

1st Feb '23

Some useful info from IEA

https://www.iea.org/data-and-s...

https://iea.blob.core.windows....

Kevin Holloway

I would agree and add Capital (LON:CAPD) to the list

Thanks for another great article. Its good to see resources discussed in detail. I'd suggest a look on YouTube at the portfoliomatters posts which have a similar focus but include oil

Retireyoung

I think you have missed mentioning Phoenix Copper (LON:PXC) (I hold) - not yet in production, but this share has started to rise rapidly over the last couple of weeks in anticipation of financing news (by end of Feb, we hope). They have a lot of critical minerals in a very safe mining jurisdiction (Idaho), an excellent and experienced management team, deep respect for their shareholders and a promise not to dilute shares by utilising their low hanging Empire Open Pit Mine to finance exploration across their other sites... watch this space for a winner IMO ;-) .

Fungus

You could consider ASX listed MRC which owns the Skaland graphite mine in Norway. This mine is the fourth largest crystalline graphite producer in the world outside of China and accounts for around 2% of global flake annual graphite production. It also owns a graphite deposit in Western Australia which it is looking to develop.

It is not a pure graphite play also owning mineral sand operations in South Africa. Definitely worth doing your research on this one before investing though as they have had some issues recently. If it can sort itself out and graphite takes off now could be a good time to acquire shares in MRC relatively cheaply.

Caper4

Agreed. (LON:PXC) is a relatively low risk long term hold for me. Expect the share to double from today’s price before the end of this year and there should very shortly be positive news about financing for the new mine .

6th Feb '23

Does anyone know why tin is down so much today? Wisdomtree Commodity Securities (LON:TINM) is down over 6%.

gilesw

24th Mar '23

How do you any of you feel about investing in Sprott inc as a low risk way of betting on commodities and precious metals?

Looks like it was too late back in late January but is it too early to start investing in these stocks?

It’s not too late to invest in the resources boom: ideas for 2023

Demand dynamics: The need for raw materials

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Megan Boxall

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