Oil is becoming less relevant as an industrial titan, as international instability and concern for environmental sustainability compromise its role in future economic development. Instead, venture capitalists are beginning to turn to a new industry with an impressive potential — metals.
When considering investing in metals, the thought of buying gold and silver typically comes to mind. While these metals partly protect a risk-averse investor from inflation, they are not subject to widespread consumption and do not occupy an omniscient role in expanding technologies. The metals that have caught the eye of the business world are less “sexy”, and are known as base metals.
Base metals such as aluminum, a lightweight and relatively strong metal, have already risen to prominence. Investors have recognized its massive potential as an essential component to structural technologies ranging from airplanes to soda cans, and many venture capitalists have already seized their share of the market. If you were hoping to catch the exponential growth of the aluminum industry, I regret to inform you that that ship has sailed.
However, a less popular, but equally as exciting metal has not yet received the attention it deserves. Magnesium, a competitor to Aluminum, is being developed as a highly attractive alternative. With a density 78% lower than that of Iron and 35% lower than that of Aluminum, magnesium is considered as one the lightest structural metals. Additionally, it retains a very high strength and, unlike Aluminum, is remarkably resistant to dents.
Demand for Magnesium is expected to rise at rate of 5% every year for the next five years, and by 2020 is expected to double. This increase is mainly a result of impressive developments in related technologies, both in the fields of transportation and energy. For example, General Motor’s new Vertical Squeeze Casting machine offers the capability of constructing vehicle parts out of Magnesium. The technology has been described as a breakthrough in lightweight materials and their role in producing structural mechanics. Automotive industries target the production of fuel-efficient vehicles, and magnesium appears to be a viable option to help reduce vehicular mass and achieve that goal.
The development of the Magnesium air battery, a project lead by the Korea Institute of Science and Technology, promises a bright future for the base metal as a source of energy. Toyota’s plans to employ Magnesium-Ion batteries in their production strengthen the prospects the metal has in becoming a central response to growing modern energy demands.
The base metal will also play a role in other, more surprising industries. A study with over 3,500 participants recently concluded that Magnesium acts as a powerful and natural anti-inflammatory, which is a primary cause to chronic disease. In 2012, the Center for Disease Control and Prevention determined that over 117 million American suffered from a chronic disease at one point or another. Investors in this commodity will realize the massive potential it has in becoming a primary dietary supplement to curb the national epidemic.
Environmental sustainability will also benefit from the usage of Magnesium Oxides in cement. A research team at the University of California has determined that organic cages made of magnesium are the most effective known method of capturing carbon. With emissions becoming a growing concern for governments, it would not be farfetched to assume that the base metal will play a pivotal role in construction as companies struggle to remain under carbon quotas.
China supplies 80 % of the global demand for the base metal. However, with increasing instability and the lack of confidence within the Chinese markets, investors are racing to become partnered with the central domestic provider for the US. Investors would be wise to get their foot in early to this potentially trillion-dollar industry.
Written by: Sion Reeler-Ballin
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