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Mining Markets Show Appetite For Energy Transition

Dean McPherson - TSX Venture Exchange and TMX Group
Head of Business Development for Global Mining, Toronto Stock Exchange


Mon, 02/14/2022 - 12:02

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Q: How have the last couple of years changed the dynamics of the mining market?

A: In terms of our daily operations, an increased number of tasks continues to be done virtually and the processes have improved. Nevertheless, 2021 saw the industry returning to many activities being conducted physically when compared to 2020. More importantly, we have been pleasantly surprised at the way in which the mining sector has rebounded in the two years since March 2020. We were very happy to see 2020 finish with such strong results and were even happier to see 2021 finish even stronger. In this sense, the dynamics of the market have been quite active as well as its investors. M&A has also been busy in 2021, as well as the industry’s focus on ESG and socially responsible mining – all of these have defined the key market dynamics for this year.

The metals and minerals that are receiving a great deal of attention include lithium, which has had a wonderful year. This has been generally true for base metals and battery metals. These include lithium cobalt, nickel and copper. Many people do not realize that copper plays a major role in the current momentum toward developing clean energy tech. Success for base and battery metals is dictated by long-standing market fundamentals, as well as by new clean energy tech ambitions, applications and interest. Electrification is a big part of this momentum, making investors pay attention. Meanwhile, precious metals continue to be attractive due to the optimal levels of gold and silver prices. Considering all of this, we can say that the market dynamics are placing Mexico at the forefront of these trends, and that is why it continues to be a key jurisdiction for us. The country has its challenges, which are well known by our investors, but there is a degree of comfort in their approach to it. In other words, Mexico stands to benefit significantly from what is happening in the mining markets. 

Q: What are some of the most important ways in which the energy transition continues to impact the mining sector?

A: As the energy transition continues its accelerating evolution, we expect more research and development investments aimed at discovering new applications for base and battery metals in green technologies. This will increase the volume of investments, not only because interest will increase but because an increasing amount of resources destined to legacy energy sectors like oil, gas and coal will be increasingly divested by investors who are comfortable with extraction industries; mining will be the next logical place for them to go. This principle also applies to the decarbonization of industrial supply chains, such as the processes of the mining industry itself. As a stock exchange, we see this interest already being expressed across the board, not just in mining.

Q: How can the market’s supply of base and battery metals be optimized to better meet the increasing demand for these commodities?

A: Demand for these commodities, in particular copper and nickel, will increase exponentially and indefinitely because they play a role not only in green energy products but also in its infrastructure: more clean technology means more connectivity and a greater need to redevelop existing distribution infrastructure, while also growing and developing new grids. Every time a new battery innovation is achieved, replacements for those networks are needed. Right now, the volume of investments that we have seen in this area has been insufficient and that is why supply seems so low when compared to demand. We now realize that these investment levels need to be drastically increased to better address this imbalance and close the gap between the supply and demand for these commodities. 2021 was an outstanding year in working toward that goal because investors are recognizing there is a definitive supply shortfall that can represent an enormous opportunity for them.

TMX Group operates global markets and builds digital communities and analytics solutions that facilitate the funding, growth and success of businesses, traders and investors. TMX offers listing markets, trading markets, clearing facilities, depository services, technology solutions, data products and other services to the global financial community.

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