MUMBAI: The hunt for stock winners in the global race for green, transition-related minerals has found a new target: Indian miners.
Shares of metals makers have outperformed local stock benchmarks this year on hopes the companies will play a potential role in the country’s green agenda following the discovery of lithium deposits in the north. That madness has companies like Gujarat Mineral Development Corpwhich is up more than 120%, as well as peer Hindustan Copper Ltdwhich is an increase of about 40%.
The increased interest in everything related to the production of batteries for electric vehicles and other renewable energy equipment has been a boon for many markets. But in Asia’s third-largest economy, investors are betting these gains will have even more headroom thanks to Prime Minister Narendra Modi’s goal of achieving net-zero emissions by 2070.
India’s drive to become self-reliant in an area dominated by a handful of countries, including China, with which it has an active border dispute, could also boost local shares. According to the Confederation of Indian Industry, India spends $20 billion annually on importing crucial minerals.
How long the gains will last, however, remains to be seen. Similar rallies in South Korea, China and Australia have led to losses, not least due to a fall in mineral prices from lithium to nickel. In India, there are doubts about the amount of minerals that can be extracted from recently discovered deposits and the quality of infrastructure. That has contributed to a recent cooldown in stock prices.
India’s refining industry also faces competition from China, Korea and Japan and needs government subsidies to become profitable, said Mohsen Crofts, an analyst at Bloomberg Intelligence.
“The critical question we need to ask about these reserves is what the value of the assets is and how profitable they can be in terms of operating them.”
Still, that hasn’t stopped some companies from continuing. Gujarat Mineral is eyeing a foothold after announcing plans to focus on rare earth mining and processing. The company also wants to produce cobalt, a material used in the wind energy sector, from its coal mines.
Meanwhile, NMDC Ltd is exploring for lithium deposits in Australia, while a three-way venture of Hindustan Copper, National Aluminum Co and Mineral Exploration & Consultancy Ltd is reportedly in contention for similar mines in Argentina. Thanks to the integration into the transition process to green energy, the shares of such miners have outperformed the S&P BSE Sensex Index by no less than five times this year.
Shares of metals makers have outperformed local stock benchmarks this year on hopes the companies will play a potential role in the country’s green agenda following the discovery of lithium deposits in the north. That madness has companies like Gujarat Mineral Development Corpwhich is up more than 120%, as well as peer Hindustan Copper Ltdwhich is an increase of about 40%.
The increased interest in everything related to the production of batteries for electric vehicles and other renewable energy equipment has been a boon for many markets. But in Asia’s third-largest economy, investors are betting these gains will have even more headroom thanks to Prime Minister Narendra Modi’s goal of achieving net-zero emissions by 2070.
India’s drive to become self-reliant in an area dominated by a handful of countries, including China, with which it has an active border dispute, could also boost local shares. According to the Confederation of Indian Industry, India spends $20 billion annually on importing crucial minerals.
How long the gains will last, however, remains to be seen. Similar rallies in South Korea, China and Australia have led to losses, not least due to a fall in mineral prices from lithium to nickel. In India, there are doubts about the amount of minerals that can be extracted from recently discovered deposits and the quality of infrastructure. That has contributed to a recent cooldown in stock prices.
India’s refining industry also faces competition from China, Korea and Japan and needs government subsidies to become profitable, said Mohsen Crofts, an analyst at Bloomberg Intelligence.
“The critical question we need to ask about these reserves is what the value of the assets is and how profitable they can be in terms of operating them.”
Still, that hasn’t stopped some companies from continuing. Gujarat Mineral is eyeing a foothold after announcing plans to focus on rare earth mining and processing. The company also wants to produce cobalt, a material used in the wind energy sector, from its coal mines.
Meanwhile, NMDC Ltd is exploring for lithium deposits in Australia, while a three-way venture of Hindustan Copper, National Aluminum Co and Mineral Exploration & Consultancy Ltd is reportedly in contention for similar mines in Argentina. Thanks to the integration into the transition process to green energy, the shares of such miners have outperformed the S&P BSE Sensex Index by no less than five times this year.
ADVERTISEMENT
