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Global defense hit record highs, bringing minor metals into focus

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Global defense stocks are rising to record highs, driven by instability and escalating conflict across the globe, including:

SP Aerospace and Defense Select Industry Index - The Oregon Group - Investment Insights
STOXX Europe Total Market Aerospace and Defense Index - The Oregon Group - Investment Insights

Minor metals are unique among commodities for their small, opaque markets, where even minor shifts can trigger major price swings — and today’s geopolitical landscape is setting the stage for some big moves.

It’s a moment offering one of those rare opportunities for investors to capitalize on the upside in equities with the right project and exposure.

“The supply of critical materials for defense and high-tech industries can be disrupted by geopolitical events, creating vulnerabilities that may affect national security and defense capabilities”

– US Department of Defense 

The Middle East, Europe, and Asia are either embroiled in conflict or on the verge of it.

Minor metals are crucial in modern warfare because they are essential components in advanced military technologies, including weapons systems, aerospace components, and electronic equipment. These metals possess unique properties like high strength, heat resistance, and electrical conductivity, making them indispensable to the defense sector.

Here are some minor metals critical to war that we think could see dramatic price dislocation, opening opportunity for investors, if the current geopolitical environment remains unstable:

Antimony:

  • Use: Antimony is used primarily as an alloying agent in ammunition, hardening lead bullets and improving their performance. Its flame-retardant properties are also crucial in military applications like explosives and protective clothing.
  • Criticality: Antimony’s role in munitions and flame-retardant materials makes it vital for military operations, especially in conflict zones where ammunition supply and safety gear are in constant demand.
  • Supply: China is accounts for nearly half of all antimony production.
  • Equities: Military Metals (TSX: MILI, CSE:MILI) provides pure play antimony access with historically operating assets and stock piles in Canada and Europe. We like that antimony is the primary target of their operations. NASDAQ listed Perpetua Resources (NASDAQ: PPTA) 

Tin:

  • Use: Tin is essential in the production of solder for electronics, which is a critical component in military communication systems, radar, and advanced weaponry. It is also used in alloys to enhance corrosion resistance in military vehicles and equipment.
  • Criticality: The military’s reliance on advanced electronics makes tin a key component in the manufacturing of circuit boards and other critical hardware.
  • Supply: China accounts for approximately 40% of global refined tin production.
  • Equities: Alphamin Resources (TSX: AFM) – affectionately known as Alphamoon is a world class high grade tin mine. The main issue we have with the mine is its location in a tricky part of the DRC. That said, to date, they have navigated their local license well. Another viable alternative is to buy the metals contract.

Tungsten:

  • Use: Tungsten has an exceptionally high melting point and density, making it ideal for armour-piercing projectiles, military vehicles, and aerospace components
  • Criticality: It is widely used in munitions, where its high density enables it to penetrate armor effectively
  • Supply: China accounts for over 80% of global supply

Rare Earth Elements (REEs):

  • Use: These elements, including neodymium, dysprosium, and samarium, are critical for producing high-performance magnets used in precision-guided weapons, jet engines, and communication systems
  • Criticality: REEs are essential in various electronics and radar systems used in defense technologies. The strategic importance of REEs has made supply security a national defense issue for many countries
  • Supply: This varies depending on the specific element, and China is a leading refiner in the space
  • Equities: Neo Performance Metals (NEO:TOR)

Titanium:

  • Use: Titanium’s strength, light weight, and resistance to corrosion make it essential for aircraft, missiles, and naval vessels
  • Criticality: Its high strength-to-weight ratio makes it indispensable in advanced fighter jets and other high-performance military vehicles
  • Supply: China accounts for over half of global titanium production

Cobalt:

  • Use: Cobalt is crucial for creating superalloys used in jet engines and gas turbines, as well as in the production of batteries and military-grade electronics
  • Criticality: Superalloys containing cobalt are used for their heat-resistant properties in military aircraft and spacecraft
  • Supply: Cobalt is primarily mined out of the Democratic Republic of Congo with Chinese companies controlling and estimated 80% of the Congolese supply. It is estimated that 70-80% of cobalt is refined in China
  • Equities: Companies such as Glencore are large cobalt producers. That said, buying them does not give you specific exposure to cobalt. Buying the cobalt contract is the easiest way to get pure play exposure to the metal

Molybdenum:

  • Use: Molybdenum is used to strengthen steel and enhance its resistance to heat, making it essential for armor plating, tank construction, and aircraft parts
  • Criticality: It is used in high-performance alloys found in many military applications due to its ability to withstand extreme temperatures
  • Supply: China is responsible for around half of the worlds molybdenum production
  • Equities: Freeport is one of the largest producers of molybdenum. There are other large diversified miners that also produce molybdenum. Your exposure to the metal is lost in these large companies 

Beryllium:

  • Use: Beryllium is lightweight and has excellent thermal properties, making it valuable in aerospace and missile applications. It is also used in nuclear weapons
  • Criticality: Due to its toxicity and scarcity, beryllium is a highly regulated but crucial metal in advanced military technologies
  • Supply: The US is a global leader in production with China in second place producing around 20% of the market

Niobium (Columbium):

  • Use: Niobium strengthens steel and is used in jet engines and rocket components because of its ability to endure high temperatures
  • Criticality: It is vital for space and aerospace industries, both of which are crucial to military capabilities
  • Supply: Brazil is the global leader in supply
  • Equities: Magris Performance Metals produces 10% of the global niobium market from its Niobec mine in Quebec, the only niobium mine outside of Brazil 

Supply Chain Vulnerability

One of the greatest challenges in securing minor metals during times of conflict is the concentrated nature of their supply. Many of these critical resources are mined and/or processed in just a handful of countries; such as China, which dominates rare earth production, or Russia, a key supplier of cobalt and antimony. Any geopolitical conflict or trade restriction threatens to jeopardize access to these materials, which could cripple defense industries that rely on them.

For example, China’s 2010 rare earth export restrictions highlighted the world’s heavy dependence on this single country for rare earth elements, which are essential for the production of advanced military systems like precision-guided missiles, aircraft engines, and communication systems.

If conflicts escalate, such supply chain vulnerabilities could have serious implications for national defense strategies. More recently we have seen China send the antimony market into an uproar after banning exports in August – a market they control.

The Growing Military-Industrial Demand

As military technologies evolve, the demand for minor metals continues to grow. 

The development of drones, hypersonic weapons, advanced radar systems, and space-based military assets relies heavily on materials like tungsten, REEs, and niobium. The production of precision-guided munitions, for instance, requires rare earth magnets, while hypersonic vehicles and missiles rely on the heat-resistant properties of tungsten and titanium alloys.

Major global powers such as the US, China, and Russia are rapidly increasing their defense budgets, signalling a growing military-industrial demand for these metals. As the world becomes more technologically advanced, so does the complexity of warfare, further emphasizing the importance of securing stable supplies of these critical materials.

Future Global Tensions and Resource Wars

Looking forward, competition over these essential resources could lead to further geopolitical conflicts, much like past disputes over oil and gas. With many of the richest deposits of rare earths, cobalt, and tungsten located in politically unstable regions, nations may find themselves vying for control of these resources. Potential “resource wars” could arise as countries seek to secure their access to the critical materials that power modern military technologies.

The South China Sea, for example, is not just a flashpoint for territorial disputes but also a region rich in untapped mineral resources, including rare earth elements. As global tensions rise, the strategic value of these resources will likely continue to grow, making minor metals an increasingly vital element in global security.

By understanding the critical role that minor metals play in warfare and the broader geopolitical landscape, it becomes clear that securing their supply will be paramount for nations seeking to maintain their defense capabilities and technological advantages in a rapidly changing world. It will also open up unique opportunities for investors to make money.

Read more on the impact of rising conflict on critical minerals:

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The Oregon Group

The Oregon Group is an investment research team focused on critical minerals, mining, energy and geopolitics.

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