Australia becomes the powerhouse of mining and resources with a strong GDP contribution. The country is one of the largest exporter of rare earths, iron ore, and various base metals. With the burgeoning transition in clean energy, electric vehicles and energy storage, investment in resources stocks takes centre stage in this report.
With the continuing robust demand for commodities from China and other emerging economies, Kalkine has recognised keen investor interest in the Australian resource sector. The attraction of resource (mining and energy) companies in Australia is that they are leveraged to this increasing Asian demand. We believe the investment case for mining companies is exciting, driven by strong global demand for resources as emerging economies expand and infrastructure is modernised across the developed world, and finite supply. In our view, the combination means that commodity prices, and, in turn corporate profitability in the Australian mining sector, will be well supported over the long-term. Despite the current outlook for much of the developed world, customers are still actively buying the essentials of daily life and consuming commodities. In the emerging markets the growth story remains robust with demographics, urbanisation and industrialisation remaining the key drivers of the resources story. We view any periods of weakness in the markets as an opportunity to participate in this long-term story at an attractive entry level. At the individual company level, volatility can create some compelling investing opportunities.