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Anna Johansson
Anna Johansson
Articles (38) 

A Diversified Mining Portfolio: 4 Strategies for Investors

Investing in mining means thinking beyond the stock market and digging deeper

December 11, 2019

The mining industry is a powerful sector, but industry analysis tends to narrowly focus on the rare earth metals used in electronics, valuable metals like gold and silver and a few stones, such as diamonds and emeralds.

Those seeking to diversify their mining portfolio need to think more broadly about the field, and that can open exciting opportunities. From mining equipment and equipment companies to regional gemstone specialties and fossils, investing in mining means thinking beyond the stock market and digging deeper.

Consider equipment companies

Whether you’re an established investor or new to this intersection between mining and finance, one space to consider investing is in mining equipment companies. That’s because the global mining equipment market is expected to grow from just under $107 billion in 2017 to almost $190 billion in 2025. Surface mining equipment is likely to be responsible for a significant portion of this growth, while metal mining will represent the largest growth sector in terms of material, meaning substantial demand for metal mining equipment.

Think sustainably

Mining gets a bad reputation because it’s considered a dirty industry by environmental activists and experts, and in some ways that’s absolutely true. Many mining companies and practices do lead to substantial pollution. In the face of ongoing backlash, though, a growing number of companies are working to clean up their act.

If you’re interested in investing in mining but you’re concerned about the environmental repercussions, you might consider investing in sustainable energy for mining. This may seem like a strange move in a field that is associated with oil and coal, but a growing number of mines are using solar energy to power their processes. Others are using wind-diesel hybrids for power and as pressure to use more sustainable practices ramps up, even more mining companies are sure to make the shift.

Material markets

There are lots of jokes about people who bury bricks of gold in their backyards, but from an investment stability perspective, those folks are on to something – there are just some materials and collectibles, including rare wines and gemstones, that almost always gain in value. Not only do these items appreciate even in the short term, they’re also a pleasure to collect.

Investing in gems, fossils or minerals can be intimidating if you’re not knowledgeable about the field, but you shouldn’t let that stop you. Instead, ask for help. An experienced investment advisor can help you select high value, attractive materials to invest in. Look for someone experienced in the mining and materials field; as Fossil Realm’s CEO Peter Lovisek says, “Acquiring fossils, gemstones and meteorites at lower than retail prices is necessary to ensure that your investment is sound. To appreciate in value, these pieces must also be rare and exquisite.” Industry insiders are the only ones with the knowledge and connections to ensure you have access to such pieces. Without them, you’re relying on luck to build your collection.

Explore new frontiers

Sometimes the best way to ensure that your mining investment is profitable is by looking beyond conventional products and practices and finding an emerging niche. Do your research and seek out rare or unusual materials to specialize in. In 2017, a Calgary-based company keyed in on a rare stone known as ammolite. Ammolite forms from fossilized ammonites under very particular conditions, which is why they’re so rare. They’re attractive to buyers because they come in brilliant colors. It can be hard to find an unusual product of this sort, but if you can identify a company that has hit upon something special and exciting, you can help shape an emerging market.

For a more predictable version of a similar investment strategy, you might also consider investing in materials mining or mining companies working as suppliers for other cutting-edge markets. For example, the electric vehicle market, as well as other electronics, require extensive mining of graphite, lithium, manganese and rare earth metals. These aren’t necessarily interesting materials, but there’s a huge market for them and that’s where the profit lies.

As an industry, mining is hardly a monolith, and that’s why investors need to keep their options open. By building a diverse, economically engaged mining portfolio, you can secure your financial future.

Disclosure: I do not own any of the stocks mentioned in this article.

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About the author:

Anna Johansson
Anna is a freelance writer, researcher, and business consultant. A columnist for Entrepreneur.com, HuffingtonPost.com and more, Anna specializes in entrepreneurship, technology, and social media trends. Follow her on Twitter and LinkedIn.

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