Investing in speciality metals recycling plants alongside primary production
It is now well understood that the forthcoming green energy revolution is built upon a range of technologies such as wind turbines, solar panels, grid storage, electric vehicles, and lower carbon steels. As a result, demand for speciality metals that enable these technologies is forecast to surge in the years ahead and sustained market deficits are predicted. There is no escaping the fact that a huge increase in primary production is needed to meet the forecast demand for speciality metals, and accordingly our strategies focus overwhelmingly on producers, yet it is clear that recycling must be incorporated into supply chains. Exposure to recyclers is a key theme for investors in mining and metals for a sustainable future, and one that will grow in importance over time. Baker Steel is one of the few specialist natural resources investors that routinely invests in recycling and downstream metal processors, which can offer lower risk, sustainable and flexible exposure to the speciality metals sector.
Why invest in recycling?
- Lower operational risk, lower costs, and greater flexibility relative to miners.
- Low environmental footprint compared to primary production.
- Margins protected and referenced on the prevailing commodity price
Recycling is key for sustainable supply chains
- Environmental benefits, reducing shipping and environmental risks in the supply chain.
- Closed loop recycling is already well established in some industries.
- More recycled battery metals will enter the market over time.
The metals and mining sector is poised for transformation by the green revolution in the coming years, supported by ambitious net zero policies by governments worldwide. The impact on the sector is particularly significant given the intensity of metal use, the current market size for many metals, and the limited known reserves of such metals. To meet this once in a lifetime demand event hundreds of billions of capex will need to be spent on developing the next generation of mines. Unlike iron ore or fossil fuels however these future facing metals will not be lost when the product life ends and can be recycled, often at a fraction of the cost and emissions output of primary production.