2022 is the Year of Green Energy and No Emission in the Mineral Resource Industry

Updated: Apr 13

Noel Ong, CEO of Samso wipes clean his crystal ball and takes a hard look at what to expect in 2022.

The Year of the Tiger is looking bright and Noel is excited to be part of our century's new Industrial Revolution.

The end of the year is when thought leaders across industries look back on trends and developments and make predictions about what is to come. It's not about having the answers or certainty to the future, though it does help give a sense of comfort and stability to try to build some sort of narrative based on experience, facts, developments and logic.

Noel Ong, CEO of Samso shares his thoughts about what to expect for 2022 in the mineral resource industry. And he is most interested in two key issues - Green Energy and No Emissions.

Today's blog brings Brilliant readers Noel's expectations of the coming year and he also gives a clear breakdown of the most important components of growth in 2022.

Market Expectations for 2022

We are likely to continue to see volatility, but Noel is hopeful the next year would be a better one. There is going to be a large amount of surplus funds in 2022, looking at how nearly AUD$400M was raised in the second half of 2020 and with over AUD$700M raised in 2021.

What this means is, the capital market is going to either burst out in 2022 and create a bubble for investors to be concerned about, or it will just carry on to 2023.

Noel is veering towards the second option simply because of all that is happening around, plus the fact that two key narratives are set to drive how things will run in 2022 - one is the No Emission movement and the other is the uncertainty of the changing landscape of the post-pandemic scene.

We are likely to see a race in the industry to be in the right place at the right time because asset allocation is trying to find a balance back to normality.

Figure 3: (Source: E& MJ)

Figure 3 from E&MJ - Engineering and Mining Journal is a clear example about the restarting of projects globally. Looking at the delayed projects, capital requirement will rise just for that portion of the market.

What happened in 2020 was, to conserve cash, most mining firms deferred capital expenditures and halted or slowed project activity. GDP growth, an important leading indicator for capital spending in the mining industry, is estimated by the International Monetary Fund (IMF) to have declined by about 4.9% in 2020.

As of the end of 2020, the number of metals and mining industry projects impacted by the pandemic exceeded 1,600, representing $212 billion, according to surveys conducted by Industrial Info. About 66% of that is for mining projects, with the remainder being for downstream processing and smelting sectors.

The good news is that most of these projects are merely being delayed as opposed to cancelled. Most delays range from three to 18 months, with a lot of project development being pushed into 2021-2022 timeframe (Source: E&MJ).

What we are now seeing in the mineral sector is a renewed interest and an increased opportunistic interest in the sector, and this will push the current "bull" run for a longer period. Should the general curve of interest run smooth, Noel thinks this will be a three to five-year run. We may well be looking at the next super cycle.

Noel is optimistic about the path ahead and his confidence in this optimistic narrative is entirely based on the EV-No Emission Revolution. This is the Industrial Revolution of our current times.