SpaceX and the Supply of Raw Materials
The spaceflight company SpaceX thinks innovatively and needs raw materials to do so. When designing the gigantic Starship, the engineers moved away from expensive carbon-fibre composites and opted instead for a special type of stainless steel. This steel not only withstands the cold of cryogenic propellants at temperatures below minus 150° Celsius but also resists the enormous frictional heat during atmospheric reentry, which can reach up to 800° Celsius. At the same time, the Raptor engine is subjected to an enormous pressure of up to 330 bar. To cope with this, SpaceX requires special alloys such as Inconel or an inner coating made of chromium-zirconium bronze, which can quickly dissipate the immense heat. Because the aerospace industry relies on niobium and titanium for components such as engine nozzles and control fins, lead times of up to 24 months are emerging in the procurement market for certain aerospace-grade metals. This material shortage highlights the pressure on global supply chains.Berkshire Hathaway Stays Out of Mining
Holding companies have often navigated cyclical economic phases for decades by consistently avoiding operational pitfalls. The investment vehicle Berkshire Hathaway has always avoided investing capital in low-margin companies threatened by rising costs. Mining companies are currently suffering particularly from rising costs for diesel, machinery, and labour, causing free cash flow to dwindle despite high commodity prices. Instead, Berkshire Hathaway’s holding company model focuses on accumulating cash and making countercyclical acquisitions during market downturns. Holding companies deliberately shift operational risks and expensive production costs to subsidiaries or project partners, thereby protecting themselves from dilution.Globex Mining Develops a Gigantic Commodities Portfolio
The Canadian investment company Globex Mining applies the principle of capital-disciplined holding companies directly to the commodities sector. Under the leadership of CEO Jack Stoch, the company operates as a kind of diversified commodities bank. Instead of financing expensive exploration drilling itself through ongoing stock issuances, Globex acquires properties at low cost and subsequently transfers them to partner companies via option agreements. On the central claims—that is, a sub-area of Cartier Resources’ Cadillac Gold Project—Globex Mining holds a 3% gross metal royalty; an extensive drilling program covering more than 100,000 m is currently underway on this area for a preliminary economic assessment (PEA). The partner company has identified 767,800 ounces of gold in the Measured and Indicated categories and 2,416,900 ounces in the Inferred category. At the neighbouring O’Brien Gold Project, the company also holds a 2% net smelter return royalty. In a preliminary economic assessment, Radisson Mining calculated an after-tax net present value of CAD 532 million for the project. Industry giant Agnico Eagle made a strategic investment of CAD 57 million in the project. According to various secondary sources, this project generator model has channeled an estimated CAD 700 million in third-party exploration capital from partner companies directly into the further development of the company’s royalty properties. At the same time, the debt-free company holds more than CAD 40 million in cash reserves and marketable securities.Globex and Technology Metals
In addition to traditional precious metal projects, Globex Mining holds a comprehensive portfolio of licenses for critical industrial metals. On the Authier lithium property in Sayona, Quebec, the company holds a 0.5% gross metal royalty. The material mined there is intended to serve as feedstock for the nearby processing plant. For the Golden Pike antimony project, Globex Mining entered into an option agreement with Albright Metals valued at CAD 1.8 million in cash and shares, with historical rock samples yielding grades of up to 57.0% antimony. In addition, the company holds a 1% gross metal royalty on the Mont Sorcier iron-vanadium project, for which Cerrado Gold is preparing a feasibility study. To further meet global demand for future technologies, Globex Mining holds a strategic stake of approximately 11% in Electric Royalties, which in turn holds 43 royalty agreements for battery metals. In this way, the company benefits in multiple ways from global demand for lithium, copper, tin, and manganese.Globex Mining as Leverage in the Commodity Supercycle
Globex Mining’s stock represents over 270 projects and more than 100 royalty agreements, which could provide strong leverage should commodity prices rise. CEO Stoch holds approximately 11% of the company’s shares, and the company is also removing shares from the market through ongoing buyback programs. The upcoming feasibility studies and the results of the ongoing drilling programs at the partner projects are likely to serve as key catalysts for the share price. While Globex is not entirely without risk given its numerous early-stage projects, the investment company is certainly an exciting prospect. Investors looking to invest broadly in commodities should take a closer look at this stock.Conflict of interest
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