Garimpeiro goes hunting for critical minerals stocks with leverage to the Trump trade war. Pic: Supplied/Stockhead
Barry FitzGerald: Creating a virtual critical minerals ETF that’s tailored for the trade war
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“Garimpeiro” columnist Barry FitzGerald has covered the resources industry for 35 years. Now he’s sharing the benefits of his experience with Stockhead readers.
It’s a bit sad really but there is no denying that the so-called war stocks are doing well out of increased geopolitical turmoil.
US President Donald Trump has upset the applecart in a big way, prompting the European Union nations and Britain to commit to cranking up their defence spending now that they can no longer rely on the US to do all the heavy lifting.
Even little Australia is feeling the heat, with the US this week pointing out that our spending 2% of gross domestic product on defence was no way near enough for a country exposed to China’s territorial ambitions.
Investing in war stocks is not exactly a common thing on the ASX. We don’t have listed companies building fighter jets, tanks, artillery and so on.
But there are ASX-listed exchange traded funds like Betashares’ Global Defence (ASX:ARMR) and Van Eck’s Global Defence (ASX:DFND) that provide exposure to a basket of global defence related stocks.
They have both posted double digit gains since the start of the year, such is the concern out there that the world is hurtling to who knows where. There is also a bunch of critical minerals ETFs out there.
It stands to reason that the global defence industry is a huge consumer of critical metals, and metals and minerals generally.
But those ETF’s haven’t performed as well in recent times because of a weighting towards the energy transition where underperforming lithium and uranium stocks has messed with their investment performance.
The Garimpeiro ETF
So Garimpeiro this week creates his own basket of stocks that stand to benefit from increasing global defence expenditure, as well as the enduring theme that the world’s advanced economies have become too dependent on China for supplies of critical metals.
Recent export bans and export “controls” ordered by Beijing on a range of critical metals in which it dominates supply is a feature of the tariff/trade wars being stoked by the Trump Administration.
After all, let’s not forget, it is the US that raised the prospect of it taking ownership of Greenland under the guise of its critical minerals potential. It has also tied future support for Ukraine to the country’s mineral deposits.
As is Garimpeiro’s want, today’s focus is on the junior explorers, not the $1 billion-plus companies found inside the defence ETFs.
The degree of importance their commodities have to the defence industry varies, as does their importance to the West’s push to develop non-China supply chains.
But they all have a critical/strategic element to them at a time when such values are becoming increasingly prized.
So here goes with a quasi ETF of juniors that have – or already are – benefitting from the rise of war stocks as an investing theme.
ANTIMONY: Larvotto Resources (ASX:LRV) – 74c mid-week – For its antimony exposure at its Hillgrove antimony-gold project in NSW.
NIOBIUM: St George Mining (ASX:SGQ) – 1.9c – For its Araxá niobium/rare earths project in Brazil.
RARE EARTHS: Meteoric Resources (ASX:MEI) – 6.2c – For its Caldeira rare earths project, also in Brazil.
GALLIUM: Nimy Resources (ASX:NIM) – 5.7c – For its Block 3 gallium project in Western Australia.
LITHIUM/BORON: Ioneer (ASX:INR) – 15 – Both critical metals with this one at its Rhyolite Ridge project in Nevada.
GRAPHITE: Kingsland Minerals (ASX:KNG) – 12.5c – For its Leliyn project in the Northern Territory.
TUNGSTEN: EQ Resources (ASX:EQR) – 4.6c – For its rising production from tungsten mines in Spain and Queensland.
And finally, BISMUTH: Garimpeiro doesn’t know what it is but some Perth guys have told him to keep his eye on E79 Gold Mines (ASX:E79) because it has encountered some of the stuff at its Mountain Home project in the Northern Territory.
The views, information, or opinions expressed in this article are solely those of the columnist and do not represent the views of Stockhead. Stockhead does not provide, endorse or otherwise assume responsibility for any financial product advice contained in this article.
At Stockhead, we tell it like it is. While Kingsland Minerals, Meteoric Resources and St George Mining are Stockhead advertisers, they did not sponsor this article.
