JH Explorer boven Groenland: Natuurlijke hulpbronnen voor de toekomst

De JH Explorer-serie volgt onze beleggingsteams over de hele wereld en vertelt over hun praktijkonderzoek op land- en bedrijfsniveau.

I recently took a work flight from London to Japan, and being a value buyer, I found a flight at 35% discount. It was a bit longer and meant flying across the Arctic Circle, but I thought offered the chance of seeing something interesting. Flying over Greenland was spectacular and a great reminder of the earth’s sensitivity to climate change.

My flight took me on an incredible route, laden with a diverse history of natural resources. It flew over England; the birthplace of the Industrial Revolution; Scotland with its North Sea oil and gas fields; the fishing industry of the Faroe Islands; and then Iceland, with its geothermal power, aluminium smelting, and fishing. Flying over Greenland was spectacular and a great reminder of the earth’s sensitivity to climate change.

The Greenland ice sheet which covers 80% of the land is incredibly significant when it comes to global warming, holding enough ice to raise sea levels by over seven metres if it were all to melt ^1. Yes, seven metres. The deterioration of the Greenland ice sheet heralds big trouble for the world; the late 19^th century Welsh safety check for deadly carbon monoxide of the ‘canary in the coal mine’ brought to the 21^st century, if you will. ² The ice shelf of Greenland is an immense natural resource, and its loss will cause a rise in global sea levels. Many cities will pay the price if we don’t prevent global warming from destroying it. Worldwide, many large cities are very close to sea level and very vulnerable to sea level rises. These include Bangkok, Amsterdam, Ho Chi Minh City, Cardiff, New Orleans, Manilla and London.³

Arctic region. Source: CIA World Fact Book

Coming over into the Inuit Nunangat – land of the indigenous Canadian Inuit peoples, we have the deep history of the Northwest Passage, Baffin Bay, the Hudson Bay Trading Company, and the gold and diamond mines. Alaska, purchased by the United States for US$7.2 million in 1867, holds some of the richest discoveries ever including the Klondike Gold Rush, Red Dog zinc mine, Prudhoe Bay the largest oil field in North America (at 25 million barrels), Sakhalin gas that is turned into liquified natural gas (LNG), the Japanese nuclear power industry, and finally landing in Tokyo, the largest city on Earth with over 37 million people.

Key considerations

Environmental, social and governance considerations play an integral part In our approach to investing in natural resource companies. Only with strong corporate governance can companies achieve sustainable business success. Workplace health and safety is a critical human right.⁴ Only by protecting and enhancing a company’s reputation and ‘social licence to operate and grow’ can a company mitigate issues such as mining permit loss or operational restrictions. Global climate change is a critical issue for society and has particular significance for natural resource assets as society moves to a low-carbon economy. These issues include transition risks and opportunities, and physical impacts of extreme weather events.

Clients frequently ask us what Janus Henderson thinks about what’s going on in the world around us and how that impacts the markets. We see huge trends that may impact our investments, including geopolitical realignment, the worldwide push for a sustainable future, and the issues of a decade of limited new resource projects now coinciding with a return of the cost of capital and project cost inflation.

The world still has decades of strong growth ahead. By 2050, population growth is estimated to increase from 8 billion toward 10 billion. Urban areas look set to grow from 4.3 billion (55% of the world’s population) to 7 billion people (70% of the world’s population). ⁵ One in three people still lack basic services. To meet the demand from a growing population and higher living standards, we will need increased productivity from constrained resources (eg. metals, energy, land, water, fertiliser).

We have seen many new world conflicts and supply disruptions leading to decentralisation of supply chains in critical resources. In response to Russia invading the Ukraine, we have seen Europe shut off Russian gas supplies, and vast sums being spent on the war. The US wants to cut dependency on technology from China. The Iran-backed Houthi rebel group has impacted Red Sea shipping, attacking commercial ships connected to Israel. As a result trade and security tensions remain very high.

This is not a decade to be overwhelmed by fear or to invest too defensively. Inflation and interest rates have soared from the falling rates of the past 30 years and abnormal ultra-low rates of the past ten years. In the next 25 years, the world wants to lower greenhouse gas emissions and manage a demographic shift from many established economies to younger, faster-growing countries. The scale of consumption of energy, metals, and food over the next 25 years overwhelms all previous periods. We need to plan and build resilient natural resources production and cities to have any prospect of managing these complex challenges.

My thoughts coupled with the amazing views from my seat reminded me about the key role that natural resources plays in the world and why I am so passionate about investing in this diverse area. Not forgetting, this is also an asset class that offers strong returns and growth potential, portfolio diversification and can provide some protection from inflation.

There are myriad of exciting and attractive investment opportunities across resources stocks. Mining and metals are fundamental to human livelihoods in the modern world – here we expect to see the greatest uplift in demand particularly in the electrification-critical metals of copper and lithium as we move towards a more sustainable world for all.

Commodities (such as oil, metals and agricultural products) and commodity-linked securities are subject to greater volatility and risk and may not be appropriate for all investors. Commodities are speculative and may be affected by factors including market movements, economic and political developments, supply and demand disruptions, weather, disease and embargoes.

Natural resources industries can be significantly affected by changes in natural resource supply and demand, energy and commodity prices, political and economic developments, environmental incidents, energy conservation and exploration projects.

Er is geen garantie dat tendensen uit het verleden zich zullen doorzetten of dat prognoses worden gehaald.

Diversificatie garandeert geen winst. Ook neemt diversificatie het risico op beleggingsverliezen niet weg.