Article: Luke Hatkinson-Kent
In a previous post, we wrote extensively about the rise of tech metals and their potential to create a lucrative revenue stream in Australia. After all, Australia’s economy is commodity-driven, while it has surely learned from previous mining booms when it allowed raw materials to be shipped overseas to bustling industrial nations such as China (which subsequently leveraged these to manufacture high-margin products for the benefit of their own economy).
In the six months since this article was published, investors have flocked to the burgeoning tech metal market, while we’ve also seen a resurgence in overseas investment in the Australian mining industry.
But what does the future hold for this exciting marketplace, and how close is the nation to adding value to these materials and creating lucrative commodities?
Then and Now: How has the Market Evolved?
In case you don’t know, tech metals are relatively complex and consist of rare earths and minerals. These form the base of numerous, high-tech products that are available in the modern age, including mobile phones, solar cells and autonomous cars. They are also an integral component of rechargeable batteries, which are currently revolutionising the consumer electronics and smartphone marketplaces.
While there are 17 rare earth elements on the periodic table, the majority of these have historically been mined and exported from China. This has created a monopoly within this burgeoning space, but Australia is positioning itself to challenge China’s dominance and restructure it’s commodity-driven economy for the future.
The nation will have been encouraged by recent developments in the U.S., where the Department of Energy (DoE) announced that it has found high concentrations of rare earths and tech metal minerals in coal samples taken from Illinois and Pennsylvania. This reaffirms the notion that rather than being especially scarce, these minerals are typically found in very low concentrations, creating a clear focus on identifying new and bountiful sources like coal mines.
Given the proliferation of old and active coal mines in Australia, the nation could is likely to emerge as a key source of tech metals in the near-term.
This has not been lost on investors, from those who prefer day trading to others that adopt a longer-term outlook. Over the course of the last six months, we’ve seen a significant resurgence in overseas investment in the Australian mining industry, which has benefited from an improved performance as it shifts towards the centre of the tech metal marketplace.
Similarly, shares of the burgeoning Technology Metals Australia Ltd (ASX:TMT) recently saw an appreciation of 4.35% (or 0.01 per share), as investors flocked to this growing and potentially lucrative space. This is part of a clear and positive trend in Australia, as we continue to see a concerted movement towards tech metal investment and mining nationwide. This may well continue to be a slow and relatively gradual process, but there’s little doubt that tech metals will form the fulcrum of the Australian economy in the longer-term.
The Last Word – Why Tech Metals and the Australian Economy are a Marriage Made in Heaven
With renewed investment and focus, Australia can finally leverage its natural resources and raw minerals to become the dominant player in the tech metal market. With resources packed full of minerals such as neodymium and praseodymium (which are used to make magnets) along with many others, the goal for the government is to create an infrastructure that can mine these raw materials and a crucial, value-adding component.
This would represent a significant change in strategy, but increased investment is the key to making this work and we’re already seeing this on a grand scale.
Remember, Australia also has an advanced economy and stringent regulatory environment, which ensures that minerals can be mined, used and refined in an efficient, compliant and sustainable way. In this respect, it is ideally positioned to dominate the tech metal market in the years to come, with only political will and a clear strategy having prevented it from achieving this aim in the past.