We had a very interesting chat with mining expert Adrian Godas.
Here are the main takeaways from the interview with mining expert Adrian Godas, broken down into digestible insights:
1. On Copper Shortage
Every portfolio manager seems owns copper (the “generalist metal”) expecting an AI/EV-driven shortage. However, the current shortage is only in copper concentrate (the raw ore from mines) due to supply disruptions in places like Congo and Indonesia.
There is actually no shortage of the refined metal itself globally; inventories have been rising for months. The perceived “shortage” in the US is artificial, panic buying caused by fear of new tariffs is sucking copper into the US while the rest of the world sees deficits.
2. Shift in the Battery Market
The West prefers NCM (Nickel-Cobalt-Manganese) batteries for range to cure “range anxiety”. China prefers LFP (Lithium-Iron-Phosphate) because they are cheaper and safer, and China has better charging infrastructure so range matters less.
Battery recycling is a financial disaster right now. The industry built massive shredding capacity expecting batteries to die in ~10 years, but EVs are lasting much longer. We have enough recycling capacity built to last until 2033 without building another plant.
Direct Lithium Extraction (DLE) is the “fracking moment” for lithium. It could cut extraction time from 2 years to hours and slash costs from ~$8k/ton to ~$4k/ton. However, it’s mostly still in the “promise” phase outside of a few projects in China and Argentina.
3. On (Critical) Defense Metals
“Critical minerals” is often a buzzword, but for defense, it’s real. China controls ~80% of supply chains and has started restricting exports of dual-use metals (like Antimony and Tungsten) to countries like the US and Japan due to geopolitical tensions.
Godas is obsessed with Tungsten (used in tanks/missiles for its high melting point). Interestingly, Tungsten is one of the few metals where the price inside China is higher than the global price because Chinese domestic mines are running out.
4. Where to Build a Mine (and where not to)
Forget the “Not In My Backyard” issues of Europe or the US. Godas notes that in many African countries, locals literally celebrate mine openings because they need the jobs. He is also very bullish on Saudi Arabia, whose state miner Ma’aden is a top-10 global player that nobody talks about.
He thinks deep-sea mining is a “total crap idea” that makes no economic sense.
Rumors of a $200B+ merger are real. The synergy? Glencore’s trading arm could squeeze better prices out of Rio Tinto’s massive iron ore volumes.
5. The Green Transition Paradox
There is no such thing as a clean transition. To make solar polysilicon, China burns coal. To mine lithium for EVs, you run diesel trucks. You aren’t replacing fossil fuels; you are often just adding more energy consumption on top (on a global scale).
The real bottleneck isn’t mining, it’s refining. China dominates refining not because of secret tech, but because they have mastered process efficiency and operate on margins that would bankrupt Western companies.
Hope you enjoy!
- Alejandro Yela — Principal Advisor, Equity Focus FIL
