Against a backdrop of strong production growth for electric vehicles (EV) and expansion of clean energy sectors, investors are recalibrating their interests towards those metals most involved in delivering these two themes.
Increased government regulation and higher standards for environmental protection in Europe are seen as the major drivers behind the trend, reveals Global Palladium Fund, the specialist provider of physically-backed metal Exchange Traded Commodities, following a European investor roadshow last week.
"Government regulations and targets to decarbonize and transition to clean energy systems are driving significant demand for some specific metals like copper and nickel. We expect the trend towards decarbonizing the world to be long lasting and the impacts in the commodity space to be here for some time." - commented Hamad Ebrahim, London-based Head of Research at Global Palladium Fund.
Economists note the significant growth in demand for commodities critical to the clean energy transition, such as metals for developing wind farms, electric vehicles, solar panels and EV batteries, while benefiting suppliers in the sector.
Alex Stoyanov, Global Palladium Fund CEO, said: "Commodities are often grouped together by investors seeking broad exposure, but this misses the opportunity to take a view on some of the most exciting mega-trends developing in the world today, because the underlying drivers for different commodities are often unique. The most sophisticated investors tend to be more focused and timelier in their approach to specific commodity investments."
The International Energy Agency estimated earlier this year that 200 million tonnes of copper will be needed to meet Energy Transition demand globally, while only 700 million tonnes in total have been refined to date. Similarly, nickel is also benefiting from the huge growth in the electric vehicle space. According to current estimates, five million EV passenger vehicles are sold each year, compared to 90 million annual sales of passenger vehicles using internal combustion engines. As governments will ban petrol- or diesel-powered cars starting in 2030, the EV market will grow towards the latter figure.
Global Palladium Fund
The Global Palladium Fund was created to make the world's precious, base and rare-earth metals accessible to everyone and to advance the development of world-changing technologies in essential areas such as aerospace, electronics, and the automotive. GPF is proud to be supported by Nornickel, the world's largest and cleanest miner, headed by Vladimir Potanin. Its ESG-compliant products are in high demand across the globe and are critical for net-zero transformation. Nornickel has operations in the Russian Far North, Finland and South Africa. MMC Norilsk Nickel shares are listed on the Moscow and Saint-Petersburg Stock Exchanges, ADRs are traded over the counter in the US and on the London, Berlin and Frankfurt Stock Exchanges. GPF ETC's are listed on LSE, Xetra, Borsa Italiana, SIX and Vienna stock exchanges.