With the world moving towards renewable energy sources and decarbonization, metal mining will play a critical role, according to a Financial Times article. However, the world will need to up the ante on investment in metal mining in order to reach net zero emissions by the year 2050.
This conclusion was reached based on studies by the Legal & General Investment Management. Based on research in conjunction with the efforts of Australian mining company BHP, the “cumulative demand for copper will have to double over the next 30 years and quadruple for nickel to achieve the Paris agreement to limit global warming to 1.5C above pre-industrial levels.”
“The challenge is simple: without a growing, responsibly run mining industry there will be no energy transition,” said Nick Stansbury, head of climate solutions at LGIM and co-author of the report. “Investors need to engage with the mining industry, not shut them out, if the industry is going to deliver the critical resources the world urgently needs.”
Given this, the mining industry will play a pivotal role in the transition to renewable energy. As such, traders may want to take a closer look at the mining industry for potential opportunities.
Getting Bullish on Metal Miners
Traders sensing an opportunity in metal miners can get double the leverage to the industry. One such exchange traded fund (ETF) to consider is the Direxion Daily Metal Miners Bull 2X Shares (MNM).
The fund, which is up 85% for the year, seeks daily investment results, before fees and expenses, of 200% of the performance of the S&P Metals and Mining Select Industry Index. The index is a modified equal-weighted index that is designed to measure the performance of the equity securities of companies in the S&P Total Market Index that are classified by the GICS as being in the metals and mining industry.
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