Energy transition requires 5-6x more key commodities

We saw the following video on twitter published by Real Vision. The short clip comes from an interview between US hedge fund manager Kyle Bass and Will VanLoh who is the founder and CEO of Quantum Energy Partners - a US private equity fund focused on the energy industry.

Watch the full clip here.

Our key takeaways:

• Will VanLoh says the energy transition will be very difficult to achieve without significant investment into new mine supply of battery materials.
  
  
• Will also mentions that the move away from internal combustion engines (ICE) to electric vehicles (EV’s) as well as the move away from traditional power generation sources (coal/gas) to wind and solar will need 5-6x more key mineral inputs like copper and lithium.
  
  
• Finally, Will mentions that the world needs to increase its production capacity for concrete and steel by 20-30x to be able to achieve the 2030 energy transition targets.

The conversation largely centres around a debate about whether or not mine supply can catch up with demand for these key materials.

We tend to agree with Will VanLoh that it may be difficult to see a whole heap of new supply come to market, but at the right commodity price, with the right incentive structures in place, we think it can be done.

This forms a large part of our overall commodity supercycle thematic where we see higher pricing over a sustained period of time across most commodities which will then encourage investment into new mine supply.