While excitement over the electric vehicle (EV) revolution cools in the U.S., Chinese miners are betting on its future.
Running up to 2018, lithium miners were the poster child for speculators looking to cash in on EVs.
That led to the boom — and bust — of lithium miners in short order.
Now the base metal bulls are taking a breather. The prolonged trade war between the U.S. and China is hurting the growth outlook of both nations.
Trouble in Argentina, Italy and Turkey shook investors’ confidence in emerging markets.
This is tempering expectations for growth and base metal demand.
China’s Contrarian Miners
Starting in 2019, large Chinese automakers are required to have EVs make up 10% of sales.
Below is a chart showing the expected growth in Chinese EVs:
With the government’s support of EVs, Chinese miners are looking to capitalize. They are buying copper, lithium, nickel and cobalt deposits across the globe. These are all metals vital for the EV revolution.
The Chinese firm NextView bought out the Argentine lithium miner Lithium X earlier this year.
Jinchuan Group is developing nickel and cobalt mines in China. It predicts a fivefold increase in demand for cobalt by 2025. Demand will continue to exceed nickel supply over the coming years.
Zijin Mining Group is in the process of buying out Nevsun Resources for its Turkish copper mine.
Reuters reported that Jiangxi Copper’s chairman mentioned plans to buy assets in Africa.
These Chinese firms, and others, are using the lull in the markets to snatch up deposits for cheap.
Mines take several years to develop and bring into production. These miners know that the EV market is going to grow. They are positioning themselves for long-term success.
In Real Wealth Strategist we have already seen nearly 100% gains from the Chinese buying spree in copper assets. We are on the lookout for more miners that offer similar opportunities.
Good investing,
Anthony Planas
Internal Analyst, Banyan Hill Publishing