I’m excited about 2023

And I wanted to pull this quote from a recent International Energy Agency (IEA) report on the energy transition around the world. It dovetails with the next company recommendation coming to you next week.

What’s important to take away from this is that we are in the midst of an energy transition. The last one occurred 100 years ago. As investors, we need to understand this, so that we can position ourselves to take advantage.

Here’s what the IEA says:

An energy system powered by clean energy technologies differs profoundly from one fuelled by traditional hydrocarbon resources. While solar PV plants and wind farms do not require fuels to operate, they generally require more materials than fossil fuel-based counterparts for construction. Minerals are a case in point. A typical electric car requires six times the mineral inputs of a conventional car and an onshore wind plant requires nine times more mineral resources than a gas-fired plant of the same capacity. Since 2010 the average amount of minerals needed for a new unit of power generation capacity has increased by 50% as renewables increase their share of total capacity additions. The transition to clean energy means a shift from a fuel-intensive to a material-intensive system.

The takeaway here is that we are moving away from a fuel intensive energy system to a material intensive energy system. That’s why we want to own metal producers – copper, lithium, nickel, manganese, etc.

That’s going to be one of our key investment theses for 2023. This is a huge, global trend. I’m excited to do the research and put us in the best companies to take advantage of this trend.

Sincerely,

Matt Badiali