In Friday’s edition of Southbank Insider, which is available to paid subscribers to any one of our publishing company’s newsletters, we pondered which resources investment will benefit most from the climate crusade known as net zero.

Will it be lithium – the battery metal?

Or copper, the metal of electrification?

Perhaps cobalt, if you can bear a bit of child labour in the mix as well as climate change campaigners seem to…

I can’t give away the answer here. But I have come up with a better alternative to invest in net zero anyway…

In 2003, I migrated to Australia. Over the subsequent ten years, the Australian dollar has very nearly doubled in value against the US dollar and almost as much against the pound.

This surreal surge was caused by an epic mining boom on the back of a flying commodities cycle. China, in other words.

Australia’s resources exports went bananas in terms of volume, price and value. Kids who had failed high school could earn more than finance graduates by working one week on and one week off cleaning the living quarters of workers at remote mining sites.

Investment into the Australian resources sector was just as extraordinary. The ASX 200 stock market index more than doubled.

UK investors in Australia would’ve made a motza, as they say down under, on Aussie stocks and then the currency gains, again.

Even the 2008 financial crisis only provided a brief, if rather dramatic, interruption to the boom.

What followed was, of course, a bust. The Australian dollar went right back to where it started in 2003. And the ASX 200 took more than ten years to hit new highs, right before the pandemic struck…

What does any of this have to do with you?

Well, if you could dream up a country that stands to benefit from net zero, what would it look like?


It has the natural resources needed for both the net zero bubble and its bust, the mining industry needed to get at those resources, the political stability to make the most of them and the experience of recent history to guide investors through the experience from start to finish.

You see, what’s coming reminds me of the Chinese mining boom of 2003-2012, all over again.

What I’m suggesting is that net zero offers a repeat of this experience, but on a much larger scale. This time, the entire world is trying to transition into a different sort of economy. And they’re all fighting for the same resources to do so.

And, this time, instead of a bust following the bursting of the 2012 commodities bubble, Australia will discover that it has an abundance of the resources needed when net zero fails, too. But first things first.

Australia is home to a lot of the resources that we need impossible amounts of in our net zero campaign. On the top of the list is copper, the metal of electrification, but it’s a very long list.

Here’s how the International Energy Agency (IEA), which may have to be renamed “the International Energy and Mining Agency,” summed it up (with my emphasis added):

[A] concerted effort to reach the goals of the Paris Agreement (climate stabilisation at ‘well below 2°C global temperature rise’, as in the [IEA Sustainable Development Scenario] SDS) would mean a quadrupling of mineral requirements for clean energy technologies by 2040. An even faster transition, to hit net zero globally by 2050, would require six times more mineral inputs in 2040 than today.

Which sectors do these increases come from? In climate-driven scenarios, mineral demand for use in EVs and battery storage is a major force, growing at least thirty times to 2040. Lithium sees the fastest growth, with demand growing by over 40 times in the SDS by 2040, followed by graphite, cobalt and nickel (around 20-25 times). The expansion of electricity networks means that copper demand for grid lines more than doubles over the same period.

Let’s add a few individual resources. The estimates vary between 700% and 4,000% increases in total supply needed:

  • Lithium 4,200%
  • Graphite 2,500%
  • Cobalt 2,100%
  • Nickel 1,900%
  • Rare earths 700%

Compare the resource shortfalls to Australia’s mineral reserves and you’ll get a decent match. Australia has the second largest copper reserves, second largest cobalt reserves, the largest nickel reserves, the fifth largest reserves for lithium and rare earths, and so on and so forth. Production rates also tend to be high, and resources, a broader definition than reserves, too.

So, do you know anyone who can increase global metals production sixfold by 2020, when the IEA estimates were made? Of course not, it’s impossible. But Australia is positioned to play a part.

The supply increase is supposed to take place in an environment of declining mining investment for many of the resources we need, and the anticipated closure and/or nationalisation of major mines in South America, for example…

All this means is higher prices. A lot higher, potentially leading to very high inflation according to one of the experts whom I recently interviewed about all of this.

The Australian Financial Review newspaper is on the case for what this means:

Australia is in pole position to benefit from a sixfold increase in demand for so-called ‘critical minerals’ worth $US12.9 trillion ($17.6 trillion) over the next two decades, driven by the race to hit net zero emissions, according to analysis from the International Monetary Fund. 

In its latest World Economic Outlook, the Washington-based multilateral lender projects that a steady 15 per cent increase in its metal price index will bolster Australia’s annual economic growth by 1 percentage point, further strengthening the government’s finances.

Let’s just say that a sixfold increase in mining output would add a heck of a lot more than 1% to Australia’s GDP…

Things are so desperate for net zero in the resources sector that Australia may actually avoid the worst of the net zero mania in an attempt to keep the rest of the world supplied with the metals that they need to go green gaga. As the Sydney Morning Herald put it, “Boosting copper output ‘the biggest contribution Australia could make’ to hitting net zero”.

The Australian mining industry is well established, experienced, resourced and capable of taking advantage of this boom. Compared to other countries, anyway.

Another factor in Australia’s favour is political risk. Most of the world’s mines are also home to troublesome governments. Some of which are in trouble themselves, including those in South America.

Australia offers reliable resource supply, making it more viable for investment and the long-term sales contracts that unlock such investment.

But what the net zero zealots might not realise is just how well-positioned Australia is to profit from the failure and fallout of net zero, too.

You see, governments seem to have miscalculated in their attempt to reach net zero. Well, they actually didn’t do the calculations in the first place. But the outcome is the same. The world is in for serious energy shortages in the coming decades.

Whether it’s investment in energy resource production (like coal, gas and oil), electricity production, renewables manufacturing, renewables installation, grid expansion and upgrades, electricity storage, or any other measure of energy you can think of, we are falling very badly behind what we need to be doing to sustain our current lifestyles under the constraint of net zero.

Of course, this takes years to become evident because the energy industry is a slow-moving beast. But it also takes many years to fix the problem once it becomes evident on your power bill. The point being that we’re in for a sustained period of energy shortages around the world.

In rich countries, this just means more expensive power bills. But in countries that can’t afford a bidding war with richer countries, they’ll be going without.

Australia just happens to have an abundance of energy resources to “fill the void”, as one of my interviewees recently put it. Specifically, the energy resources which are fast and easy to bring online can be found in Australia, alongside the renewable energy metals.

Especially gas, which is much faster to develop into production than other forms of energy resources. It takes about twice as long for mines to be developed as gas wells, for example. So, when facing an energy shortage and the speed of developing a lot more energy becomes crucial, Australia will benefit once again.

All of this puts Australia, and the owners of Australian investments, in pole position when it comes to the failure of net zero to live up to expectations. You just need to transition from the right metals to gas at the right time.

But in the end, I suspect it’s the Australian dollar that’ll do all the favours. While the UK languishes in the doldrums of net zero and a plunging pound, the Australian dollar will be flying high once again.

Parity, here we come!

Until next time,

Nick Hubble
Editor, Fortune & Freedom