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The Green Road Starts In The Black Earth

Earlier this week I wrote that anyone who wants to share knowledge in one way or another is a potential reader of Graphene Ventures. This means I will actually be writing for a broader audience than I originally thought. So the question I am left with is: how can I make this blog more engaging and useful for everyone?

For the foreseeable future I’ve decided to focus less on the analysis of graphene companies and to put more emphasis on my own learning process. In this piece I’ll start by telling you about how I got interested in investing.

Investing is something I actually ‘fell into’ rather than actively sought, after reading many articles about global energy supply and demand issues in Autumn 2009. While thinking about those issues it became clear to me that the energy-sector would be an amazing long-term investment opportunity, and one I should not pass upon.

So why did I think back then, and continue to think now, that the energy market is such a tremendous opportunity? For starters, there continues to be a rising energy demand largely driven by the rapid growth of emerging and frontier markets – something which I see as being an irreversible process. Secondly, the supply of energy is becoming more unpredictable for several reasons:

– Politically unstable suppliers in the Middle East;

– Increased challenges getting oil out of the ground;

– National / regional protectionism, for example export tariffs and nationalisation processes (like Argentina recently seizing control of an oil company).

However, this investment opportunity is not only about energy supply and demand. For me, it is more about the ability to change the energy market as we know it. Why? Because I am fully convinced that the way the current energy market is organised is highly unsustainable. Not only do we have a supply and demand issue, but there’s also a huge environmental problem on top of that. And that’s where (funnily enough) investing in mining companies comes into the picture…

It’s seems like a contradiction: mining and a better environment. But it’s not. I realised this after reading an article by the highly esteemed Jack Lifton, who said that the green road starts in the black earth. And if there’s one idea I’d like you to think about, it’s precisely that.

Here’s why. Think of aeroplanes, cargo-ships, cars, trains and buildings. Think of wind turbines, batteries, solar panels and the latest nuclear (pebble bed) reactors. Think of laptops, tablets, smartphones and other electronic devices. All these things are built of material that comes out of the black earth. So if you want to improve the way we build and use all these things (i.e. and change the energy market), you should start by thinking about those materials that are critical to cleaner and more efficient products.

Using this hypothesis I started doing a lot of research into (clean) technology minerals. After a while I started to focus on one specific group called rare earth elements (REE) – thanks in part to some excellent online articles by the aforementioned Jack Lifton. From what I can remember I must have spent the whole Christmas break in 2009 reading more about REE than I ate turkey. After intense discussions with my father we decided to start investing in the rare earth elements-sector. In January 2010 we bought shares of a company called Great Western Minerals Group.

Next week I’ll blog about some valuable lessons I have learnt when investing in mining stocks.

(Featured photo courtesy of the University of Houston, via Purdue University.)



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