By Adam Pankratz
Recent comments by Prime Minister Trudeau and Chrystia Freeland, Canada’s new Minister of Finance, that the restart to Canada’s economy must “think big” and “be green” ought to perk up the ears of investors. Though the meaning behind these words has yet to be defined, opportunities may well appear in industry sectors hitherto ignored or relegated to niche markets.
With a deficit that is already confirmed to be $343 billion for this year, that is no small deal.
This is where the comments on the need for the economic restart to be “green” have raised eyebrows. For investors, parsing the meaning of “green” will be all important.
For the “green restart” has thus far not at all been defined. This fact could lead to both optimism or serious fear. Does “green” mean improvements to existing technology and a quickened and steady, but measured, march towards sustainable technologies and renewable energy? Or does it mean a paradigm shift to fully renewable energy and ideas based on wishful thinking and ideological dreams? The former is eminently possible, and even desirable, while the latter will take Canada over an economic cliff.
Many in the resource sector would argue their plans qualify as green and ought to be included as such. Here lies serious opportunity of resource sector investors. A recent report by the Task Force for Real Jobs and Real Recovery, a coalition established to explore natural-resource solutions to support economic recovery in Canada, was replete with ideas to minimize environmental impact by resource and extraction industries.
Research commissioned by the report concludes that the correct factors for success could lead to a 17% increase in real GDP and 2.6 million jobs created. Now that’s an economic restart. Highlights of the report outline the support for carbon capture and low emissions technology as well as establishing a Canadian hydrogen industry. Will such initiatives be welcome or will ideological opposition to a report which also recommends governments “publicly and vocally endorse the Canadian natural resource brand,” scuttle any chance that ideas from such quarters have a favorable reception as part of our economic future?
So far, the answer to this question has not been given, though clues perhaps lie in the past words of the key players in the Trudeau cabinet as well as its chosen advisors.
Trudeau, Freeland and environment minister Catherine McKenna all have, in the past, clearly indicated a leaning to a revolutionary green shift. However, at this point it remains speculation. Investors looking for opportunity can look to resource-focused green tech companies. The marriage of Canadian resource wealth and technological innovation is the untold story of Canada’s resource industry and now that the government is looking to go green, the opportunities could be vast.
For example, there are numerous junior exploration companies that are exploring for battery metals for use in electric vehicles. These include lithium, nickel, manganese, graphite, copper and cobalt. There are several companies targeting vanadium that, besides its use as an alloy, is increasingly used in vanadium redox batteries to store electricity on a large scale.
New solar panels utilize silver and readers of Resource World will already be familiar with a number of silver exploration and mining companies. As well, gallium, indium and tellurium (which sometimes occur with high-grade gold deposits) are utilized to create the thin-film photovoltaics needed in solar panels.
In 2017 the World Bank launched its first major study on green tech metals. The authors argue that meeting the Paris Accord will result in skyrocketing demand for metals like cadmium, neodymium and indium. According to the Bulletin of Atomic Sciences, a 2 megawatt (MW) wind turbine contains Rare Earths – about 800 pounds of neodymium and 130 pounds of dysprosium for their magnets. Electric vehicles also use Rare Earths for their magnets. Other Rare Earths – europium, terbium – are used in energy-efficient lamps.
The list goes on. An investor who finds a company with a decarbonizing technology, new mine efficiency or which targets green tech metals and gets in early could be very well rewarded indeed.