INTRODUCTION
What follows is a series of essays I am writing where I lay out my thinking on what has happened in the global economy in the last quarter century, what forces are/were responsible for this change, what the future may look like, and the implications for investment in critical materials. The model that defined much of the past 25 years, specifically low cost of capital globalization, optimized supply chains, and globally integrated trade is moving towards a model shaped by global fragmentation, the combining of econoimic and national security, economic chokepoints, and competition for strategic materials.
This shift has implications for capital allocation and investment returns, specificallt for critical materials.
The story is broken down into three Acts much like a Shakespearean play. This is an apt comparison given the triumph and tragedy we have seen and are likely to continue to experience as a host of forces collide to both create and destroy opportunities across borders.
Act I discusses the global macroeconomic forces that led to change and makes the case that these are in many ways irreversible; Act II discusses constraints to growth in this new order, and Act III discusses the implications of these changes for investors.
The economic assumptions many of us grew up on can no longer be taken for granted. Critical raw materials still form the backbone of economic growth, but these assets and projects are set to take on an elevated level of importance as governments prioritize security and resilience. The chase for the lowest cost of production is over. The “game” for investors will be figuring out which projects can be financed and operated profitably given these emerging economic and geopolitical constraints.
Each of the essays serves as a pillar which supports this new economic operating environment. This document is also a work in progress, so comments are welcome.
The document is about 100 pages in length, so please click here for a pdf version.