No Net Zero Without Boost to Mining Investment: Euroz Hartleys
THE CONFERENCE CALLER: There will be no net zero by 2050 without a substantial increase in mining investment, according to Euroz Hartleys (ASX: EZL) at the 2023 RIU Sydney Resources Round-up. By Ngaire McDiarmid
Managing director and head of institutional sales Tim Bunney said the largest wealth management firm in WA was “incredibly optimistic about the resilience and the outlook of the resources market globally”.
He said the current inflationary environment had put pressure on margins but had created a strong backdrop for commodity prices.
The outlook was further buoyed by the emerging decarbonisation and electrification thematic, coupled with significant underinvestment, Bunney said.
Resources analyst Michael Scantlebury said the energy transition represented “the greatest opportunity” the resources sector had ever faced, touching on three topics he was strongly advised not to talk about, namely coal, politics, oil and gas.
He said the oil and gas industry spent about half a trillion US dollars in the upstream sector maintaining supply and argued there needed to be an increase in both oil and gas investment while rapidly building out the renewable sector “to ensure an energy crisis does not occur in the transition period”.
He believed the build-out phase would be the most metals-intensive and would require spending in the order of oil and gas capex to achieve net zero targets.
Electric vehicles and the build-out of electricity grids were the huge drivers of metals demand in the process, he told the conference which has attracted 1,500 delegates.
“We’re confident that exploration needs to increase and that is largely just to backfill and grow out the pipeline of resource projects which is becoming depleted and more marginal as well,” he said.
Referring to a chicken and egg scenario, Scantlebury said a solution for the lack of exploration, especially greenfields exploration, was high commodity prices to drive risk capital into greenfield exploration.
“Even if you ignore everything I say about the energy transition and you’re a climate sceptic and you believe in thermal coal is the solution to all energy requirements, you can still be a resource sector bull,” he said.
He said the mining investment cycle showed a capex underspend since 2015 and was underpinned by traditional growth from emerging markets in India and South-East Asia.
“We believe that the energy transition metal requirement is purely the cherry on top of this metal demand going forward,” he said.