A Roadmap for Green Metals in 2024

Last year was a bloodbath for mining stocks tied to the green energy transition. But with markets rallying in the early part of 2024, ‘green miners’ continue to lag.

Last year was a bloodbath for mining stocks tied to the green energy transition. But with markets rallying in the early part of 2024, ‘green miners’ continue to lag.

Unfortunately, that doesn’t bode well for a sharp turnaround in 2024. Dampening that outlook further is the string of negative news over the last week.

Mining billionaire Andrew Forrest’s privately owned Wyloo Metals announced a shutdown of its nickel operations in Western Australia due to falling prices. Lithium giant Albemarle (NYSE: ALB) revealed job cuts and a trimming of its capital expenditure. It also unloaded its stake in Liontown Resources (ASX: LTR) after last year’s failed takeover bid. Liontown’s stock price has now plunged more than 44% since the new year.

Even the insiders have lost faith. Pilbara Minerals (ASX: PLS) CEO, Dale Henderson, sold around 1.2 million shares following the company’s latest earnings result.

But to get a handle on what 2024 looks like, we should first clarify why green metal stocks sold down so heavily in 2023. You see, mega renewable energy projects are expensive. So too are the mining devel- opments which supply the raw materials for these metal intensive projects. Given we’ve just embarked on one of the most hawkish monetary regimes in modern history, it explains why the sector plummeted last year.

But according to the former chief of commodities at Goldman Sachs, Jeff Currie, ‘green’ metals could return with a vengeance this year. That’s based primarily on expected rate cuts.

You see, rising rates have diminished the public’s appetite for extravagant renewable mega-projects. It’s perhaps one of the reasons why crude came back into focus last year. Fossil fuels are energy dense, making them a relatively cheap option. We could also add uranium to the list, another energy-packed commodity that can supply reliable, base load power.

But the key point from Currie is this: in a high-cost environment, traditional energies reign. He labels them the ‘brown’ commodities.

So why could 2024 see a major pivot back to ‘green’ metals? It’s simple really. The idea of capital-intensive green energy projects becomes a difficult pill to swallow in an economy struggling against the rising cost of living.