2 Miner Stocks to Buy ASAP, 1 to Sell

2 Miner Stocks to Buy ASAP, 1 to Sell

Posted On July 26, 2023 8:46 am

Mining plays a pivotal role in a nation’s economic development. As the global shift towards renewable energy accelerates, a surge in demand for critical minerals required for clean energy technologies, combined with government funding, could significantly boost the mining industry’s growth.

Given this backdrop, mining stocks Fortescue Metals Group Limited (FSUGY – Get Rating) and Amerigo Resources Ltd. (ARREF – Get Rating) could be wise portfolio additions now, while it may be advisable to steer clear of fundamentally-weak stock Lithium Americas Corp. (LAC – Get Rating).

Before analyzing these stocks, let’s examine the forces shaping the mining sector.

Roughly half of the global GDP relies on natural resources, without which the other half could not be sustained. The mining sector, a crucial conduit for natural resource extraction, is integral to diverse sectors, including construction, manufacturing, technology, and energy. It furnishes the vital materials necessary for sustaining our households, businesses, and infrastructural operations.

Countries worldwide are significantly ramping up investments to facilitate the shift to a clean and digital-centric economy. This trend has ignited a surge in global demand for critical minerals, including but not limited to copper, lithium, nickel, cobalt, and rare earth elements, which form the building blocks of several manufactured products.

For instance, the escalating demand for lithium in the EV and consumer electronics industries has opened new vistas for the mining sector. Global lithium demand is expected to outmatch production in 2023 by around 3%. According to Li-Bridge, demand for lithium batteries in the United States alone is expected to surge more than six times, culminating in $55 billion annually by the close of the decade. The global lithium market is anticipated to reach $10.60 billion by 2028, growing at a CAGR of 13.4%.

On the other hand, mining companies are increasingly embracing technological advancements, such as cloud computing, AI, and machine learning, to optimize resource extraction, improve operational efficiency, and reduce environmental impact.

Furthermore, governmental agencies are promoting Foreign Direct Investments (FDI) in the mining sector and offering funds, which could keep the…

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