In the midst of World War One, the American government made a disturbing discovery – several vital metals needed for the military effort were increasingly hard to find.
Officials swiftly drew up a critical mineral list, alongside a policy to help secure these commodities. Similar policies have now been drawn up across the Western world, focusing on minerals that are essential for defence, energy and technology. The Tories devised a strategy for the UK too, an update is overdue from Sir Keir Starmer and should be delivered imminently.
Government concerns are all too timely.
China dominates the metals industry and can withdraw supplies at a whim. Russia is a major producer of many commodities, but all its goods are under sanction. The conflict between Iran and Israel has put the entire world on notice and global supply chains are increasingly under threat.
For canny investors, this dangerous cocktail creates an opportunity – to buy shares in critical mineral mining firms and benefit from rising demand for their wares. Certain stocks stand out, including titanium-focused Empire Metals, whose shares have doubled since Midas tipped them 18 months ago and Greenland-based Amaroq, a gold and rare earths specialist, up nearly 90 per cent – whose shares have more than doubled since Midas recommended them in the summer of 2022.
Empire Metals
Lightweight, durable and rust resistant, titanium is a vital component for the defence industry, used in tanks, submarines, aircraft and missiles. The metal also plays a key role in renewable energy, while its dazzling white cousin titanium dioxide is essential for paints, plastics and paper.
Empire is developing one of the largest titanium mines in the world, a 400 square mile site in Western Australia, just north of Perth.
Midas recommended the shares in December 2023 at 9.5p. Today they are 23p, but supporters believe the price has much further to go, with several important milestones to come this year and next.
Empire is developing one of the largest titanium mines in the world, a 400 square mile site in Western Australia, just north of Perth
Titanium is a vital component for the defence industry, used in tanks, submarines, aircraft and missiles
Most titanium comes from low-grade ore, which is processed to create titanium dioxide. Conversion is costly, particularly for defence equipment and premium pigments, which need top-quality material.
Empire’s mine is different, with exceptionally pure titanium dioxide that is ideal for the highest-grade titanium markets.
Just this month, Empire chief executive Shaun Bunn, a geologist with decades of experience, unveiled tests showing his mine can simply and cost-effectively deliver titanium dioxide that is more than 99 per cent pure.
The news puts Empire in a different league from conventional producers and it has set pulses racing among investors, customers and government experts.
Titanium is on critical mineral lists around the world, but the good stuff is in extremely short supply.
Empire is backed by the Australian government, the group is in talks with officials around the world and interest is mounting among potential customers, from Japanese titanium specialists to pigment and paint producers.
In the next few months, Bunn expects to produce an independent estimate of his mine’s resources, a study on costs and a new test facility to fast-track development.
Turning a vast mine site into a commercial operation is a tough job and an expensive one. But Bunn and his team are seasoned hands and are already evaluating ways to finance this project and take it to fruition. The rewards could be extensive. High-grade titanium dioxide sells for thousands of dollars a ton, demand is rising and Empire is well positioned to benefit.
Early-stage miners are not for the faint-hearted, but existing shareholders have already done well out of Empire and, at 23p, the shares still look like a bargain for adventurous investors.
Traded on: Aim
Ticker: EEE
Contact: empiremetals.com
Amaroq
As President Donald Trump has made clear in recent months, Greenland has plenty of attractive attributes, not least its rare earth minerals. These play an integral role in military kit, such as radars and missiles, they are used in wind turbines and electric motors and they are critical for smartphones, computers and other electronic devices. But China has cornered the market, which makes all of us vulnerable.
While Trump and Chinese premier Xi Jinping wrangle over access to these commodities, Greenland-based Amaroq has been busy, acquiring land and licences to become the largest private holder of mining rights in the country.
The group, formed eight years ago, owns the right to mine for gold, rare earths and a range of other critical minerals over an area five times the size of Greater London.
Gold production has already begun, from a dormant mine brought back to life by Amaroq’s energetic chief executive Eldur Olafsson. Production will ramp up next year, with a target of up to 20,000 ounces of gold.
The Greenland-focused company owns the right to mine for gold, rare earths and a range of other critical minerals over an area five times the size of Greater London
Amaroq is aiming to mine up to 20,000 ounces of gold next year
Profits should accelerate exploration for other commodities, including copper and rare earths, and, speeding the process along, Olafsson has this month acquired two new sites on Greenland’s west coast. These include another dormant mine, which previously produced lead, zinc and silver.
The deals were partially financed by an oversubscribed £45 million stock market fund-raise, supported by UK, American and European investors, including Denmark’s state-backed export and investment fund.
Olafsson has his work cut out in turning all this potential into commercial reality, but he has made encouraging progress and investors seem impressed.
Midas tipped Amaroq in 2022 at 44p. Today the shares are 80p and brokers expect the price to rise further, boosted by heady sales and profits growth.
With Greenland in the international spotlight and Amaroq in pole position, the shares should deliver long-term rewards.
Traded on: Aim
Ticker: AMRQ
Contact: amaroqminerals.com
Valterra Platinum
Platinum has been used in jewellery since Ancient Egyptian times. Lustrous, rare and hard-wearing, it is a top choice for wedding and engagement rings to this day.
Despite its romantic allure, however, industry accounts for the vast majority of demand for platinum and its partners in mine, palladium and rhodium.
The trio, known as platinum group metals (PGMs), can be found in products from medical tools to computer panels, they are core components for green energy technologies and play a central role in catalytic converters, which reduce exhaust emissions and have been mandatory for years in the UK, Europe and America.
Prices of these metals have been volatile, as forecasters predicted that combustion engines would soon be replaced by electric vehicles and that demand for PGMs would fall off a cliff.
Now it seems the doom-mongers were mistaken and Valterra Platinum should benefit. The Johannesburg-based group split off from parent Anglo American on June 1 and is now an independent company listed on the London Stock Exchange.
The shares have had a good start but, at £29.72, there should be more growth to come.
Valterra is also looking into new uses for PGMs, including batteries for electric cars, hydrogen power and even food containers to keep produce fresh for longer
Valterra is the largest PGM group in the world, with huge mines and top-quality processing plants used both in-house and by other mining groups.
Annual production is focused on platinum, palladium and rhodium, but other metals are part of the business too, including gold, copper and chrome.
The range should work in Valterra’s favour, while trends in the electric vehicle market are helpful too. Interest in these cars is growing far more slowly than predicted, with traditional cars accounting for more than 90 per cent of sales outside China last year.
That means catalytic converters remain very much in demand. Valterra is also looking into new uses for PGMs, including batteries for electric cars, hydrogen power and even food containers to keep produce fresh for longer.
Chief executive Craig Miller is an experienced operator and he is determined to use Valterra’s scale and heft to best advantage.
The group also intends to pay out 40 per cent of underlying profits in dividends, which suggests generous future payments.
With platinum in demand and Valterra firing on all cylinders, the shares should deliver long-term rewards at £30.20. It is also reassuring to see a company choosing to list in London.
Traded on: main market
Ticker: VALT
Contact: valterraplatinum.com
Sovereign Metals
Rio Tinto is one of the largest mining companies in the world, valued on the stock market at more than £70 billion.
As a giant of the industry, it can pick and choose who to do business with, and last summer it chose Sovereign Metals, an Aim-listed junior, focused on titanium and graphite in Malawi.
Starting out with a 15 per cent stake in the business, Rio has built up its holding to 18.5 per cent, provided in-depth technical support and invested in a study to see whether the mine is feasible. The signs are good so far.
Sovereign’s mine, Kasiya, covers around 75 square miles, roughly the size of Stoke-on-Trent.
The site is home to the world’s largest known deposit of rutile, an oxide mineral composed of titanium dioxide, and the second largest graphite resource.
Rutile can be processed to create high-grade titanium dioxide, while graphite plays a key role in steel production and is a central component of lithium-ion batteries used for electric vehicles and energy storage.
China dominates the graphite industry, so much so that President Trump has threatened top Chinese operators with tariffs of more than 700 per cent!
Sovereign could change the dynamics of this market.
Backed by Rio Tinto, it intends to become the lowest-cost graphite producer in the world, beating China at its own game by delivering a mineral that is top quality, reasonably priced and produced with green credentials.
Chairman Ben Stoikovich has already completed extensive, practical studies on his mine, aided by Rio Tinto.
By the end of this year he hopes to publish a definitive report assessing Kasiya’s economic viability. Once the report is done, Rio has six months to decide whether to continue with the partnership, mount a full-blown bid for Sovereign or walk away.
Supporters are confident that Sovereign will deliver a world-class mine, come what may.
The shares have had a roller-coaster ride in recent months, soaring to 48p before Stoikovich embarked on a £20 million fund-raise in March by issuing shares at a 13 per cent discount.
Today the stock is 32p but should recover over the months ahead.
Titanium and graphite are on critical mineral lists around the world, and Rio Tinto’s investment suggests that Sovereign’s mine is a good ’un.
Traded on: Aim
Ticker: SVM
Contact: sovereignmetals.com.au
