The green energy paradox

July 23, 2019


 

Trends such as the rise of electric vehicles (EVs) and the increase in demand for renewable energy, in which copper is a key conductor, are adding to global demand for copper. This widespread need is a potential income boon for the countries that mine it, like Chile (the world’s largest copper producing country), Peru, Mexico and Indonesia.

But copper is not the only metal feeling the effects of the green energy movement, many commodities are beneficiaries of the growing adoption of renewables and accompanying technological advancements. Metals such as nickel, lithium and cobalt are essential components in battery technologies. While mining in such commodities is global, emerging markets such as Russia, Argentina, China and the Democratic Republic of Congo, have a dominant position.

We believe there are select opportunities in commodities as a result, despite the current short-term uncertainty partly due to trade tensions and creeping investor wariness of a market downturn. However, on a longer term view as brown energy becomes more expensive and as green becomes an increasingly mainstream substitute, commodities linked to next-generation energy will likely experience a tail-wind in our view.

Matthew T. Jenkin, Rick R. Rosania and Kyle M. McDonough, Mellon, a BNY Mellon company

Recommended for You

All investments involve risk, including the possible loss of principal. Certain investments involve greater or unique risks that should be considered along with the objectives, fees, and expenses before investing.

Investing in foreign denominated and/or domiciled securities involves special risks, including changes in currency exchange rates, political, economic, and social instability, limited company information, differing auditing and legal standards, and less market liquidity. These risks generally are greater with emerging market countries.

Charts are provided for illustrative purposes and are not indicative of the past or future performance of any BNY Mellon Investment Management product.

BNY Mellon Investment Management is one of the world’s leading investment management organizations and one of the top U.S. wealth managers, encompassing BNY Mellon’s affiliated investment management firms, wealth management organization and global distribution companies. BNY Mellon is the corporate brand of The Bank of New York Mellon Corporation and may also be used as a generic term to reference the Corporation as a whole or its various subsidiaries generally.

Mellon is a global multi-specialist investment manager dedicated to serving our clients with a full spectrum of research-driven solutions. Mellon Investments Corporation (Mellon) is a registered investment adviser and an indirect subsidiary of The Bank of New York Mellon Corporation.

Views expressed are those of the author(s)/manager(s)/advisor(s) stated and do not reflect views of other managers or the firm overall. Views are current as of the date of this publication and subject to change. This information should not be construed as investment advice or recommendations for any particular investment. Please consult a legal, tax or investment advisor in order to determine whether an investment product or service is appropriate for a particular situation. No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission. BNY Mellon Investment Management, Mellon and BNY Mellon Securities Corporation are subsidiaries of BNY Mellon.

MARK-69646-2019-07-18