Daily Brief: If You Want To Save The Planet, You’ll Need To Invest In Miners

Daily Brief: If You Want To Save The Planet, You’ll Need To Invest In Miners

almost 2 years ago3 mins

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One of Europe’s biggest asset managers warned on Tuesday that more investment in mining is needed to meet the Paris Agreement’s climate goals.

What does this mean?

Miners have fallen out of favor with investors in the last few years, mostly because the carbon-intensive practice doesn’t suit the trend toward renewable investments. But here’s the acute irony: industrial metals like copper and nickel are more important than ever to eco-friendly technologies, from electric vehicle batteries to wind farms.

Legal & General Investment Management, then, is predicting that miners will need to produce twice as much copper and four times as much nickel over the next 30 years. If they don’t, the world will struggle to keep global warming within 1.5 degrees celsius above pre-industrial levels. And right now, it thinks those production targets aren’t feasible. In fact, consultant Wood Mackenzie thinks the mining industry needs $2 trillion worth of investment to stand any chance of meeting those ambitious goals.

1.5 degree pathway

Why should I care?

For you personally: Choose carefully.

If you’re going to play your part, keep in mind that some miners are greener than others: coal-powered nickel producers in Indonesia generate far more emissions than hydropower ones in Canada, for instance. That’s why Legal & General thinks you should back those with the lowest possible carbon footprints to help bring down emissions across the entire mining industry.

The bigger picture: The UN kills the vibe.

That wasn’t the only cause for concern this week: the UN also warned that the energy transition is “backsliding” as countries scramble to find alternatives to Russian gas. And since most haven’t built up a robust enough renewable infrastructure yet, those alternatives ain’t pretty: the amount of funds raised for coal projects last quarter were twice as high as they were the same time last year. The UN isn’t hopeful: it now thinks the world’s on track to warm by more than 3 degrees.

UN report

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AMD’s Buying Data-Center Specialist Pensando

AMD image

AMD announced that it’s buying data center specialist Pensando earlier this week, in a deal that should open up a state-of-the-art sector for the US chipmaker.

What does this mean?

With digitization and hybrid working now the norm, there’s been a massive surge in demand for the data centers that house the servers underpinning the world’s IT infrastructure. That’s made operators build out even bigger centers, and in turn look for ways to make them run even more efficiently. Enter AMD: the chipmaker just announced the $1.9 billion purchase of Pensando, whose chips and software speed up processing times and reduce operating costs for data centers. It could be a game-changer: the deal will allow AMD to get its hands on Pensando’s cost-saving chips and a long list of big-name clients – including Goldman Sachs, Oracle, and Microsoft – to boot.

AMD market share

Why should I care?

For markets: Intel snoozes, Intel loses.

AMD’s been growing fast over the past few years, and a lot of that’s down to the market share it’s been poaching off data center rival Intel. The chipmaker went from controlling less than 1% of the market in 2017 to 18% at the end of last year, as Intel slipped from 98% to 76%. That might partly be why investors sent AMD’s stock up 1,300% and Intel’s just 12% over the same period…

AMD stock
Source: Google Finance

The bigger picture: Nvidia’s in too.

AMD still has some stiff competition: Nvidia just released a new AI-powered chip designed to enhance data center performance, which could help cut down processing times from weeks to days. Issue is, the sheer amount of power it needs to do the job could put potential customers off – especially given how crippling energy prices are right now. That’s probably something Nvidia will need to fix if it wants to become a more significant threat to Intel and AMD in the space.

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Disclaimer: These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment advisor.

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