It’s harder to think of a more 21
st century investment than electronics. Everywhere you look, electronics are an integral part of our lives and industry, from smartphones to electric vehicles to autonomous machines.
Investing in the electronic makers directly is tricky because the sectors are inherently competitive. But even though it’s difficult to figure out which company or product ends up on top, there’s undeniable momentum in the manufacturing of the products. Electronics will
need to be built at increasing rates, and they’ll need efficient batteries.
How do you invest in batteries? Perhaps the most clear-cut and simple way is to break them down and start at the beginning of the production process. The batteries that operate our high-end electronics require a number of specific metals and components to be produced, so the best bet is to look at mining companies focused on those specialty battery metals.
The most common types of batteries in high-tech today are lithium-ion (Li-ion) batteries and nickel metal hydride (NiMH) batteries, and the subsequent key battery metals are lithium, cobalt, and nickel. Additionally, graphite and manganese are critical components in the batteries, and vanadium is rising as an alternative metal in the field. Investors should look for mining companies with diversified portfolios of metals that include some of the key battery metals.
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Another significant revenue for investment is in the battery manufacturers themselves. Again, regardless of which tech or automotive companies come out ahead in the market, many have recognized that the batteries themselves face guaranteed demand. Smartly, many competing tech companies have battery manufacturing divisions.
If you’re looking to invest in batteries and battery metals, look for long term supply constraints and demand trends. Which metals are oversupplied or undersupplied, and when is that forecast to change? Which batteries are in high demand, and which way is the industry headed?
For example, you might find the battery metals market has a glut of supply in one key metal. At the same time, forecasted demand for that metal might be expected to increase as a result of an increase in products that require it for battery production, or a general shift towards one type of battery over another.
Regardless of the exact scenario, most analysts expect the rise of electronics to continue over the next few years. With those electronics will come batteries, and the metals for those batteries have to come from somewhere.
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