NEWS | August 9, 2023

Smart Money Flowing into Clean Energy

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Goldman Sachs surveyed the super-rich about their investment choices. The result revealed that the currently favored topic among wealthy family offices is “clean energy.” Over 60% of these companies plan to invest capital in this sector next year. Information technology and healthcare are also seen as long-term growth themes by the super-rich, according to the study. Given the anticipated developments, these areas have the potential to withstand economic cycles and increase in value over the long term.

To serve these growth markets, companies require the right resources: U.S. mining company KoBold Metals has secured $200 million for a project focused on using AI to locate critical battery raw materials like cobalt and lithium for electric vehicles. One of the investors is Bill Gates’ Breakthrough Energy Ventures, a venture capital firm for climate-friendly technologies. Norwegian energy provider Equinor and Japanese automaker Mitsubishi are also involved. The use of AI for resource exploration is not new. China also employs artificial intelligence to analyze satellite images, identifying potential sites for rare earth elements.

To not only extract but also process resources, refineries are essential. However, there are still too few of them in Europe and the United States. Elon Musk is addressing this by building his own lithium refinery in Texas. To convert lithium ore into lithium dioxide usable for batteries, Tesla is investing $375 million. The refinery aims to commence operations next year and achieve full production capacity by 2025.

Where money flows, demand follows. There is still a considerable need for resource extraction and especially processing critical raw materials like rare earth elements. The resulting scarcity is likely to drive prices higher for a long time to come.