IMARC takes place in Sydney from November 2–4, bringing together the most influential people from across the Australian and international mining industries. So what can we expect from the conference?
The changing discourse around the role of ESG (environmental, social and governance) for institutional investors has forced a rethink to portfolio management, particularly those tied to the mining and resources sector.
However, senior investment analysts predict Australia’s mining and resources sector will be vital to the global decarbonisation transition and warn against disinvestment.
Australia’s commitment to sustainability, rule of law and efficient infrastructure makes it an attractive proposition for investment in the mining and resources sector.
The interwoven challenges between decarbonisation and good investment strategies are to be debated at the International Mining and Resources Conference (IMARC) in Sydney in early November.
A major focus for investors right now is the mass-decarbonisation across the entire mining value chain, but global hurdles are slowing efforts and putting an emphasis back on providing cost-effective, quickly sourced energy forms to help nations struggling with power generation.
“There’s no question that there’s a global trend towards decarbonisation,” Queen’s Road Capital Investment chief executive officer and director Warren Gilman said.
“Even though we’re suffering some extraordinary bumps in that road at the moment, that’s the inevitable trend.
“And that opens up different pockets of opportunity. Divestment in the carbon industry, whether it’s gas or coal or natural gas, means there is more investment in alternative fuel sources like uranium.
“Decarbonisation generally tends to also mean electrification, and that obviously has an impact on demand for battery metals. But necessity often trumps trends like this and we’re seeing a short-term necessity for the re-investment in carbon-based energy forms around the world to fill what is hopefully a short-term requirement.”
A major reason for that requirement is Russia’s invasion of Ukraine, which is disrupting energy sources within Europe and beyond, with a flow-on effect reaching around the world.
“Russia was a big importer and exporter of coal,” SW Accountants and Advisors partner Blayney Morgan said.
“You stop the imports which were mostly from Ukraine and you stop the exports, and you’ve really mucked up the entire market.”
The impact of Russia’s actions has also highlighted the global susceptibility of relying on foreign resources. This is forcing many countries to rethink the role of globalisation within their own economy.
However, while domestic self-sufficiencies might seem an attractive proposition, this is not necessarily an achievable prospect.
“There’s certainly a much greater awareness of the idea of the security of supply chains and domestic production due to the impacts of COVID, the invasion of Ukraine and the polarisation of global politics generally,” Gilman said.
“Countries have realised that you are putting your populace at heightened risk by not having a domestic supply chain and a domestic source of inputs, so there’s an increased realisation of that risk.
“I wouldn’t say there’s a trend towards mitigating that risk yet, but people have been talking about it more and making some movements in that regard.
“For example, there’s been an increase in the global discussion about domestic sourcing of what are viewed as critical minerals for chips and semi-conductors.
“This isn’t new. That risk didn’t happen overnight, just awareness has increased. I think there’s always been some awareness, but it’s been combined with complacency and at the end of the day economics has tended to trump the risk.
“The incentive is just not there to prioritise domestic resource security and the government has had other priorities. They’ve been all about efficiency and cost reduction, not about security, so I’m not sure that’s going to change.”
And until domestic supply chains become more of a priority, places like the United States, Australia and Canada are providing the best investment opportunities.
“Australia is top of the heap. It’s in a wonderful position. Along with Canada, the two countries are the best to invest in when it comes to mining,” Gilman said.
“You have access to courts that are viewed as fair and reliable and that is the biggest advantage any country can have. After that, you need the resources in the ground and obviously Australia has a tonne of those.
“You’ve got a population that has, for lack of a better description, mining in their blood. Australia has a history of mining and a significant part of its population makes its living from mining and a mentality that responsible mining creates wealth and opportunity with minimal damage.
“As long as you’ve got that mindset, you’ve got an opportunity to develop those resources.
“Australia also has very sophisticated capital markets. And because of its history it’s used to financing mining opportunities, which is critical for the viability of the industry.
“One might argue that nowhere else in the world has the mining building blocks to the degree that Canada and Australia have them.”
Morgan echoed Gilman’s sentiment.
“My personal view is Australia is just such an easy place to do business,” he said. “You see it in the valuations with the lower cost of capital and that’s because it’s got the right legal system.
“It has good infrastructure, good people who are well trained and it’s the lucky country mostly because we’re the empty country, which enables the opportunity to build really good projects.”
IMARC is a forum where these rich investment opportunities can be explored with mining heavyweights and exciting newcomers to the industry.
“A key role of IMARC is to highlight challenges and provide a positive and productive forum where people can talk about those things in a safe space rather than feeling like they’re the only ones having that issue,” Morgan said.
Gilman describes it as a chance to take the temperatures of other investors and corporates in terms of what they are seeing.
“I’m looking forward to finding out who’s doing well, who’s struggling, what commodities are in vogue, which ones aren’t, what areas of the country are continuing to support mining and what areas are experiencing more of a push back,” he said.
IMARC has a dedicated three-day stream covering investment and financial issues facing the sector, with over 120 mining companies exhibiting on the expo floor in the mining and investment hub.
A crucial event for any industry investor, IMARC is the only forum of its kind that uses enhanced and accurate networking technology to match delegates, allowing them to pinpoint new business and investment opportunities and start important conversations.
This feature appeared in the October issue of Australian Resources & Investment.