The energy transition from fossil fuels to less carbon-intensive ways of producing electricity and transporting it won’t happen without so-called “green metals.”
These metals, including lithium, copper, nickel, cobalt, iron and rare-earth elements, are used in wind and solar farms and for getting the electricity produced there to the grid. They’re also used in batteries for electric vehicles and for electricity storage for when the wind isn’t blowing or the sun isn’t shining.
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“Minerals are essential components in many of today’s rapidly growing clean energy technologies, from wind turbines and electricity networks to electric vehicles,” the International Energy Agency states. “Demand for these minerals will grow quickly as clean energy transitions gather pace.”
The demand doesn’t just come from the fact that the world is building more low-carbon energy generation sources and electric vehicles. It’s also because these uses require more of these metals than coal or natural gas power generation or conventional internal combustion engines.
Demand is expected to outstrip supply for most energy transition materials by 2030, according to McKinsey & Co. “Across a range of minerals and rare earth metals … supply is dwarfed by the collective demand from the energy transition and other uses,” the consultancy states.
For producers of green metals, this increasing demand will be a windfall. Here’s a look at seven mining companies that will have an impact on the energy transition as well as their year-to-date performance and dividend yields:
| Stock | YTD return as of Nov. 17 | Dividend Yield |
| Exxon Mobil Corp. (ticker: XOM) | -1.6% | 3.6% |
| Livent Corp. (LTHM) | -30.9% | N/A |
| Fortescue Metals Group Ltd. (OTC: FSUGY) | 28.5% | 6.9% |
| Vale SA (VALE) | -5.9% | 8.3% |
| Glencore PLC (OTC: GLNCY) | -4% | 8.9% |
| Freeport-McMoRan Inc. (FCX) | -3.9% | 1.7% |
| MP Materials Corp. (MP) | -33.4% | N/A |
Exxon Mobil Corp. (XOM)
It may seem odd to top this list with an oil and gas production giant, but Exxon Mobil is getting into mining for lithium, a key metal in electric vehicle and grid-level batteries and one of the green metals expected to be in short supply in coming years.
The company said this month it plans to use oil and gas drilling techniques to access lithium-rich saltwater under southwest Arkansas and then separate the metal from the brine and convert it to battery-grade material.
The company aims to be in production in 2027 and says it is looking at growth opportunities in lithium around the world. By 2030, it expects to produce enough lithium to supply a million electric vehicles per year.
Of course, the company isn’t abandoning its fossil fuel business. It recently started production at a third project offshore from Guyana and announced a huge acquisition of West Texas fracking giant Pioneer Natural Resources Co. (PXD).
At the same time, the company has enormous resources to put toward energy transition technologies such as carbon capture and storage and green hydrogen. Also considering its lithium ambitions, the company is definitely going to be part of the energy transition.
[READ: 6 Best Green Hydrogen Stocks and ETFs to Buy Now]
Livent Corp. (LTHM)
Investors looking for a purer play on lithium, as demand for the metal soars along with expanding electric vehicle production around the globe, can consider this company.
It produces lithium hydroxide, lithium carbonate and lithium chloride and has a six-year supply agreement to deliver lithium hydroxide to General Motors Co. (GM) starting in 2025. Livent also has a deal to deliver lithium hydroxide to Ford Motor Co. (F) for 11 years.
The company is merging with Allkem Ltd. (OTC: OROCF), which has lithium brine operations in Argentina, a hard-rock lithium operation in Australia and a lithium hydroxide conversion facility in Japan.
Livent said recently that Arcadium Lithium, the holding company of the combined group, has gotten all the necessary regulatory approvals for the merger, which Livent and Allkem are aiming to close in January.
Fortescue Metals Group Ltd. (OTC: FSUGY)
This Australian company is an iron ore producer, positioning it well for key needs of the energy transition.
Wind farms require a lot of steel, for which iron ore is a key ingredient. Steel is used primarily for the towers that support the blades and nacelles that convert blowing air into electricity. This is especially true for offshore wind farms, whose turbines dwarf their land-based counterparts.
The U.S., long a leader in onshore wind energy, is just getting into the offshore game, creating an additional market for steel used in offshore wind farms. Although Fortescue sells most of its iron ore to China, any development that increases global steel demand is good for iron ore producers.
Steel is also used in electric vehicles and electrolyzers that turn water into oxygen and hydrogen and can be powered by renewable electricity to create “green hydrogen.”
Fortescue is transforming itself into a company that will produce enough green hydrogen and other resources to decarbonize its operations by 2030. The transition will also enable Fortescue to begin selling green hydrogen, providing another source of revenue that could serve as a cushion against volatile iron ore prices.
Green hydrogen will be increasingly used by the steelmaking industry, one of the sectors where greenhouse gas emissions are harder to abate compared with the auto or technology industries. Hydrogen can be used to replace coal in the process of making the steel, reducing carbon emissions. And if that hydrogen is produced with green energy, then it reduces steel’s carbon footprint even more.
The changes will cost the company billions of dollars, but they could mean Fortescue could become a major producer of not one but two steelmaking ingredients: iron ore and green hydrogen.
Plus, hydrogen could end up saving the company money on fuel and differentiating it among mining competitors for environmental, social and governance, or ESG, investors. And if the company ever decides to spin off its green hydrogen business, that could benefit shareholders as well.
Vale SA (VALE)
Vale is the world’s biggest iron ore producer, giving it a leg up in all the steelmaking that will go on in the energy transition. But it also produces copper, nickel and cobalt, all of which are also key to the world reducing its reliance on fossil fuels.
Although its main source of revenue is iron ore, the company is also one of the biggest nickel producers in the world. In addition to being used in stainless steel, nickel is also a component in electric vehicles, power storage, and wind and solar farms.
In the third quarter, Vale spent nearly $300 million on growing and sustaining its nickel operations. During the quarter, it brought in more than a billion dollars in net operating revenues from its nickel segment, second only to its iron operating revenues.
Glencore PLC (OTC: GLNCY)
“Resistant to very high temperatures, cobalt is used to create the batteries that store solar power, as well as run our phones, tablets and laptops. It’s also playing a lead role in renewable energy and the electric car revolution.”
That’s according to Glencore’s website. The company should know. It’s the biggest cobalt mining company in the world. Last year, the company produced nearly 44,000 metric tons of the metal from its own mines, up 40% from 2021.
Glencore’s marketing — or trading — arm sources commodities from other companies as well and sells them to customers around the globe. The company also mines copper, which is one of the most broadly needed metals for the energy transition, making Glencore a key player.
Freeport-McMoRan Inc. (FCX)
Of all the metals that are key to the energy transition, copper is one of the most important.
It is used in solar and wind farms, connecting renewable energy projects to the grid and upgrading the grid to a more distributed model rather than one reliant on centralized power plants. It’s also critical to electric vehicles.
Freeport-McMoRan is one of the largest copper miners in the world and is a major producer of molybdenum, which is used to alloy steel and is also used in wind and solar projects, carbon capture and storage operations, and nuclear power, all of which will be part of the energy transition.
During the third quarter, the company produced more than a billion pounds of copper and got an average of $3.80 per pound, up from $3.50 a pound in the third quarter of 2022.
MP Materials Corp. (MP)
The 17 rare-earth elements are widely used in smartphones, TVs and LED lights. Because they are also used in wind turbines and electric vehicles, these elements are vital to the nation’s transition to a greener economy.
MP Materials says it is the largest producer of rare-earth materials in the Western Hemisphere and delivers about 15% of the global rare-earth supply.
Last year, MP Materials produced nearly 43,000 metric tons of rare-earth oxides in concentrate, an amount the company says was the highest annual rare-earth production in U.S. history. It also sold a record 43,198 metric tons of oxides, boosting revenue to a record $527.5 million, representing 59% year-over-year growth.
The company is targeting a 50% increase in oxide production within four years with what CEO James Litinsky says will be a “modest incremental investment.”
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7 Best Mining Stocks for the Energy Transition originally appeared on usnews.com
Update 11/20/23: This story was previously published at an earlier date and has been updated with new information.
