Capital Asset Flows in Metal Markets

by Michael Tanner

The Mines Minneral Model was created and utilizes a material flow analysis to estimate the material needed to fulfill the carbon neutrality goal by 2050.

Supply curves for copper and nickel are generated using these yearly outputs. With these curves, future investments are created to compare to a standard metric, Treasury Bills, and how the firm should proceed. These formulas could provide insight into investments and projects. If you have any questions, please contact us and we can answer any of the questions and help with consulting. The link to the model is in the conclusion.

Abstract

Governments and policy makers are currently faced with a choice between meeting growing energy demand with fossil or renewable loads – with both having significant tradeoffs. The choice between these assets is a short- and long-term planning issue that the International Energy Administration & the Energy Information Administration (United States) have undertaken to determine the mix of energy sources needed to achieve certain energy sustainability benchmarks. Building upon the infamous “Mines Mineral Model” – this paper will explore how capital resources might be allocated during these projected transition scenarios by placing an expected value on different mineral investment structures. The initial model explores two metals (Copper and Nickel) and utilizes a classical Capital Asset Pricing Model to shed light into possible capital flow patterns for different metals and transition scenarios. Based on this initial model, more work is clearly needed to understand how minerals and metals critical to our nation’s security will obtain access to capital given poor performance for investors. We also note the tremendous amount of research yet required to confirm/supplement these results.