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Australia Resource Investing 101

If you’re curious about the Australia investing buzz that’s been happening in recent years, we’ve got a quick summary of how it started and where it’s going.

If you’re reading this, chances are you’ve seen some of the recent buzz around Australia as a destination for resource investment and potential profit.

Australia ranks as the 13th largest economy in the world, due in no small part to its mineral largess. Between 2010 and 2020, mining contributed an impressive 10.4 percent to Australia’s economy, translating to a gross domestic product of AU$202 billion.

The country is a global mining hotspot, and its abundant natural resources and government incentives have attracted some of the mining industry’s biggest names: BHP (ASX:BHP,LSE:BHP,NYSE:BHP), Rio Tinto (ASX:RIO,LSE:RIO,NYSE:RIO) and Newcrest Mining (ASX:NCM,OTC Pink:NCMGF).


Nearly half of the companies trading on the Sydney-based Australian Securities Exchange (ASX) — the primary stock exchange in Australia — are listed in the basic materials and energy sectors.

The state of Western Australia is one of the world’s premiere mining jurisdictions, coming in fourth after Nevada, Arizona and Saskatchewan. According to the Fraser Institute’s Annual Survey of Mining Companies 2020, three other Australian states and territories rank in the top 20 mining jurisdictions in the world: South Australia (seventh), Queensland (16th) and the Northern Territory (19th).

Australia has been a plentiful provider of diverse commodities in the resource investment space for over a century; if you’re curious about exploring it for yourself, here’s a quick guide on the origins of the country’s resource industry, the current landscape for mining investment and future opportunities.

Australia investing: The beginning

European settlers first arrived in Australia in the 1780s, and by the 1790s whale oil and baleen (whalebone) had become the colony’s first major exports.

When the 1820s rolled around, the economy grew exponentially through fine wool production. By the 1830s, wool had overtaken whale oil as the colony’s biggest export, with New South Wales replacing Germany as Britain’s primary supplier by 1850.

1851 saw the beginning of a major gold rush in Australia, causing the area’s population to surge from 430,000 to a whopping 1.7 million by 1871. In 1901, Australia’s first federal government was formed, and for the next 30 years, agricultural goods remained one of the country’s biggest exports, with wheat and dairy products being added to the roster.

The UK was Australia’s biggest export destination by the early 1960s, but it had begun to enhance its relationship with its European neighbours. At the same time, Australia was working to strengthen its ties with Asia, and by 1966/1967 Japan had become the country’s biggest export destination.

While Australia’s economic roots were formed in the agricultural sector, the 1970s brought a surge of mineral and fuel exports, driven specifically by iron ore and coal.

Fast forward to 2013/2014, and iron ore, coal and natural gas had become the country’s top three exports, with rural commodities falling to the wayside.

During this transitional period, Australia’s trading relationship with the UK further waned as Japan and China became the country’s two primary export destinations. China eventually overtook Japan as Australia’s leading export partner in 2009/2010, and according to a report from Australia’s Department of Foreign Affairs and Trade, the UK made up only 1.4 percent of Australia’s exports by 2013/2014.

Australia investing: Current opportunities

Today, Australia’s mining industry is comprised of more than 350 mines and the production of 19 different mineral commodities. Gold mines are the most common operations, and according to the US Geological Survey, the country is the world’s second largest gold producer.

While Australia’s major gold rush took place over a century and a half ago, current industry trends show that there is still much to be explored, discovered and put towards modern-day industries and technologies. You can find a number of gold investment opportunities to consider in the Investing News Network’s (INN) Best Gold Stocks on the ASX article.

Along with precious metals, Australia’s most valuable mineral exports include base metals, battery metals and energy resources. The country leads the world in iron ore production, and is also an important source of global aluminium, nickel and copper supply.

Western Australia is a key nickel-mining jurisdiction within Australia, and accounts for 90 percent of the country’s economic reserves of the metal. BHP and Glencore (LSE:GLEN,OTC Pink:GLCNF) both have nickel-mining operations in the state. Other important nickel stocks for investors to watch include IGO (ASX:IGO) and Mincor Resources (ASX:MCR,OTC Pink:MCRZF). Those interested in learning more about nickel opportunities should check out INN’s article Nickel Stocks in Western Australia.

Australia is second only to Chile when it comes to copper reserves, and the red metal reigns supreme in the South Australia, which is home to the world’s fourth largest copper-producing mine, BHP’s Olympic Dam. Other nickel operations in South Australia are OZ Minerals’ (ASX:OZL,OTC Pink:OZMLF) Prominent Hill and Carapateena mines. INN’s Copper Stocks in South Australia and Copper in Australia articles offer investors further insight on what to know about the base metal in the country.

Aside from that, Australia is abundant in energy resources such natural gas and uranium. With more than a dozen basins that yield natural gas, Australia hosts significant natural gas reserves. Natural gas is the country’s third most valuable resource export, as per the most recent data from the Department of Foreign Affairs and Trade, earning more than AU$49 billion for the economy. Chevron (NYSE:CVX) and Shell (LSE:RDSA,LSE:RDSB,NYSE:RDS.A,NYSE:RDS.B) are the biggest natural gas producers in the country.

Uranium is another important sector in Australia’s resource industry. The country is the third largest uranium producer globally and hosts more than one-quarter of the world’s known uranium resources. Both of the country’s two producing uranium mines are in South Australia: BHP’s Olympic Dam mine, the largest-known uranium deposit in the world, and the Four Mile mine, owned by Quasar Resources.

In recent years, Australia has also come to dominate the global lithium industry and is well positioned to capitalise on the rapidly growing electric vehicle market. Increased demand for lithium has proved positive for ASX-listed lithium stocks. The nation ranks second in the world for lithium reserves behind Chile, but when it comes to annual lithium production Australia’s output is more than twice as high.

Australia’s largest lithium mine is Greenbushes, which is majority controlled by China’s Tianqi Lithium (SZSE:002466), the largest hard-rock lithium miner in the world. Tianqi owns a 51 percent stake in Talison Lithium, which operates the mine, while major producer Albemarle (NYSE:ALB) owns a 49 percent stake in Talison via its acquisition of Rockwood Holdings.

Rare earths are another important commodity segment for technology, and Australia is set up to take advantage of opportunities in this market too. The country holds the sixth largest-known rare earths reserves in the world, and rare earths production in Australia has been rising over the last few years.

Northern Minerals (ASX:NTU) opened Australia’s first heavy rare earths mine in 2018, producing heavy rare earths products such as dysprosium, which is used in permanent magnet technology. Lynas (ASX:LYC,OTC Pink:LYSCF) operates the Mount Weld mine and concentration plant in Western Australia, and the company recently announced plans to boost production to 10,500 tonnes per year of neodymium-praseodymium products by 2025.

Other rare earths projects in the country include Australian Strategic Metals’ (ASX:ASM) Dubbo project in Central New South Wales, Arafura Resources’ (ASX:ARU,OTC Pink:ARAFF) Nolans project in the Northern Territory as well as Hastings Technology Metals’ (ASX:HAS) Yangibana project in Western Australia.

Australia investing: Investor takeaway

Australia’s abundant natural resources, close proximity to export partners, top-notch mining jurisdictions and plethora of publicly traded mining companies together put the country in a unique position to be a leader in the global economy of the 21st century. Investors with an eye on lucrative opportunities in the resource sector would do well to consider Australian mining stocks and further educate themselves about the Australian mining outlook.

As a resource-intensive economy, the Australian dollar moves with the commodities the country exports. Those who play the Australian market should have an understanding of how the Australian dollar impacts miners and look to where the Australian to US dollar conversion rate is trending.

This is an updated version of an article first published by the Investing News Network in 2018.

Don’t forget to follow us @INN_Resource for real-time updates!

Securities Disclosure: I, Melissa Pistilli, hold no direct investment interest in any company mentioned in this article.

Featured

The mining and resources sector now sets its sights on Australia’s largest mining investment forum, Mines and Money @ IMARC, co-located with IMARC from January 31, 2022, to February 2, 2022, at the Melbourne Showgrounds.

It was gold price, lithium demand and China’s appetite for copper that dominated much of the discussion at Mines and Money Online Connect @ IMARC this week at the virtual event running from the 19th to the 21st October.

Mines and Money Online Connect saw 90 mining companies, 600+ investors and more than 2,000 participants log-on to hear mining executives and analysts discuss the next big thing for savvy investors in 2022.

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Rio Tinto Iron Ore Chief Executive, Simon Trott and Rio Tinto Managing Director of Port, Rail and Core Services, Richard Cohen, joined community members, local businesses and representatives from local government to celebrate the official opening of its new community ‘Hub’ in Karratha. Located on Ngarluma country in the heart of Karratha’s CBD, the new Rio Tinto Karratha Hub will make it easier for local …

Rio Tinto Iron Ore Chief Executive, Simon Trott and Rio Tinto Managing Director of Port, Rail and Core Services, Richard Cohen, joined community members, local businesses and representatives from local government to celebrate the official opening of its new community ‘Hub’ in Karratha.

Located on Ngarluma country in the heart of Karratha’s CBD, the new Rio Tinto Karratha Hub will make it easier for local people to connect with our busines.

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Rio Tinto is progressing an innovative new technology to deliver low-carbon steel, using sustainable biomass in place of coking coal in the steelmaking process, in a potentially cost-effective option to cut industry carbon emissions. Over the past decade, Rio Tinto has developed a laboratory-proven process that combines the use of raw, sustainable biomass with microwave technology to convert iron ore to metallic …

Rio Tinto is progressing an innovative new technology to deliver low-carbon steel, using sustainable biomass in place of coking coal in the steelmaking process, in a potentially cost-effective option to cut industry carbon emissions.

Over the past decade, Rio Tinto has developed a laboratory-proven process that combines the use of raw, sustainable biomass with microwave technology to convert iron ore to metallic iron during the steelmaking process. The patent-pending process, one of a number of avenues the company is pursuing to try to lower emissions in the steel value chain, is now being further tested in a small-scale pilot plant.

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an illustration of clouds hanging over buildings created with binary code
KanawatTH / Shutterstock

Cybersecurity is a growing issue globally, and demand for threat protection is increasing alongside it. Tech-savvy investors have an opportunity to harness these trends.

Cybersecurity is a growing threat globally, and demand for threat protection is increasing in tandem.

In Australia, the cybersecurity market is projected to grow at a rate of 15.2 percent over the next five years compared to only 2.5 percent growth in the general Australian technology industry.

With many companies shifting to work-from-home models over the last two years due to the COVID-19 pandemic, there's been extra pressure on the cybersecurity sector, making it an industry that should see continued elevated expansion for the foreseeable future. Read on to learn more about the cybersecurity landscape in Australia.


What do cybersecurity companies do?

The cybersecurity stocks category includes companies that offer cyber recovery solutions in the event of an attack, as well as companies that offer consultations on cybersecurity for businesses and organisations.

Cybersecurity companies may also bolster cyber defences through methods like hardware, services and cloud-based software, particularly in software-as-a-service (SaaS) applications.

As a newer industry, most Australian cybersecurity businesses are less than nine years old and are primarily private. Gauging performance can be challenging as company value is based on the aftermath of a cyberattack.

Even so, there are opportunities for potential profit. To give investors an idea of the options, the Investing News Network used TradingView's stock screener to create a list of the top ASX-listed cybersecurity stocks. Companies are listed in order of market cap from largest to smallest, and data was current as of December 20, 2021.

1. Family Zone Cyber Safety

Market cap: AU$393.4 million

Family Zone Cyber Safety (ASX:FZO) offers an app to help control screen time and restrict cyber bullying. Parents can use the app to restrict social media, block inappropriate apps, set up an internet filter and limit in-app purchases.

The company has experienced year-on-year share price growth of about 20 percent so far in 2021, and in August announced the acquisition of UK-based digital school safety company Smoothwall for AU$142 million. The purchase was funded through a AU$146 million capital raise.

2. Tesserent

Market cap: AU$200.22 million

Tesserent (ASX:TNT) provides a range of internet security services for the education, manufacturing, insurance, legal, finance, logistics and government markets.

The company hangs its hat on its Cyber 360 strategy, which has three components: identifying and assessing threats, risks and protection; taking corrective action; and responding to threats and other incidents.

3. Prophecy International Holdings

Market cap: AU$98.61 million

Prophecy International Holdings (ASX:PRO) is a software company with two products: EMite is a SaaS analytics platform, and Snare is a scalable platform of centralised log management and security analytics products to help customers manage cyber threats in real time. The firm struggled through much of 2020 due to COVID-19.

However, things are looking up for Prophecy, with nearly 90 percent share price growth year-on-year, and new contracts with major businesses like Airbnb (NASDAQ:ABNB) and Johnson & Johnson (NYSE:JNJ).

4. Sovereign Cloud Holdings

Market cap: AU$93.81 million

Sovereign Cloud Holdings (ASX:SOV) and its AUCloud product serve Australian government clients, the Australian Defence Force and Critical National Industry communities. A leading infrastructure-as-a-service company, the company provides cloud-based computing services like Virtual Desktop as a Service.

The Canberra-headquartered company saw an increase to AU$1.1 million revenue in the first half of the 2021 fiscal year, although its share price has been dipping over the past 12 months.

5. Senetas

Market cap: AU$53.03 million

Senetas (ASX:SEN) and its subsidiaries provide network data security solutions. Based in South Melbourne, its main customers are governments and businesses all over the world. Since 1999, Senetas has provided products used in cloud services, big data protection and encryption security services.

6. ArchTIS

Market cap: AU$52.39 million

ArchTIS (ASX:AR9) designs and develops secure information-sharing and collaboration infrastructure. It offers Kojensi Cloud Service for organisations to share documents securely, as well as Kojensi Enterprise for collaboration on classified material and Kojensi Field for military and aid workers to collaborate in the field.

7. WhiteHawk

Market cap: AU$23.84 million

Launched in 2016, WhiteHawk (ASX:WHK) offers an online tool to small- and medium-sized enterprises to take action against cybercrime. It is one of the first global online cybersecurity marketplaces. The cloud-based platform delivers artificial intelligence solutions through intuitive virtual consults. The company has won multiple US federal government contracts, and is also working with other large entities such as universities.

8. Vortiv

Market cap: AU$12.84 million

Founded in 2005 as Transaction Solutions International, Vortiv (ASX:VOR) started out as a payments business in India providing ATM and automated bill payment services. Renamed Vortiv, the company has expanded in cybersecurity, acquiring Decipher Works in 2017 and Cloudten Industries in 2019.

Vortiv sold both companies in December 2020, but is continuing its cybersecurity efforts, offering an electronic surveillance system through its stake in TSI India.

Don't forget to follow us @INN_Australia for real-time updates!

Securities Disclosure: I, Ronelle Richards, hold no direct investment interest in any company mentioned in this article.

closeup of a periodic table of elements focused on vanadium

The vanadium market in Australia has proven volatile over the years, but there are many potentially promising companies in the market.

Vanadium is important due to its non-corrosive properties and wide uses. However, due to its unstable state, pure vanadium is not often found in nature, making it rarer than many other industrial metals.

Vanadium was discovered in 1801 by scientist Andrés Manuel del Rio and was named after the Norse goddess Freyja, whose old Norse name is Vanadis. It is a non-corrosive, silver-gray transition metal with high malleability.

The metal is often embedded within compounds, such as vanadinite, carnotite, patronite and phosphate, as well as some iron ores and crude oils. Overall, vanadium is present in around 65 different minerals that naturally occur in trace amounts in some rock formations. It is generally produced by reducing vanadium oxide with calcium.


Once reduced, vanadium is usually mixed with iron to form metal alloys that are used to produce high-strength steel, which can be further used in a variety of essential industrial applications, such as tools, jet engines, oil and gas pipelines, motor vehicle parts and bars for construction.

Aside from its key application in steel, vanadium is used to produce many other materials as well, both industrial and non-industrial, including ceramics, textile dyes, synthetic rubber, fertilizers, electronics and welding materials. It can be used to make alloys in superconductor construction and nuclear engineering, and in its chemical form, vanadium is used to produce sulfuric acid, fuel cells and batteries.

Read on to learn more about this unusual metal, and which companies in Australia are focused on it.

Vanadium in Australia: The current landscape

Vanadium’s top three producers worldwide are South Africa, China and Russia, which are also the countries with the largest vanadium reserves. China is responsible for the majority of the world’s vanadium output at 60 percent, with Russia at 17 percent and South Africa at 7 percent globally. Currently, there are no vanadium mines in the US or Europe, making it a relatively untapped market for most of the western world.

While vanadium is a highly useful and versatile element, its market presence has always been shaky. This is because it is closely tied to the steel industry, meaning that when steel production increases, so does vanadium consumption. This link can cause vanadium’s price to fluctuate rapidly, plummeting and spiking in conjunction with demand for steel. For example, in 2004, vanadium was priced at just US$5.70 per pound, but over the course of the year its price almost tripled, coming in at US$16.89 by 2005.

Unsurprisingly, the vanadium market in Australia has proved volatile over the years, with ups and downs in terms of resource availability and production. While there are quite a few vanadium-focused companies located in Australia, the country has not historically been a top producer of the metal.

Some of Australia’s existing vanadium companies include King River Resources (ASX:KRR), with its Speewah vanadium project located in the Kimberley region of Western Australia; Neometals (ASX:NMT,OTC Pink:RRSSF), with its vanadium-centric Barrambie project in Western Australia; Technology Metals Australia (ASX:TMT), with its Gabanintha project in Western Australia; and Venus Metals (ASX:VMC), with its Western Australia-based Youanmi vanadium project, located just southeast of Windimurra.

Another emerging vanadium miner is Australian Vanadium (ASX:AVL), which owns the Australian Vanadium project located in the Murchison region; it spans about 260 square kilometres in Western Australia.

Recently, Canadian firm Currie Rose Resources (TSXV:CUI) announced plans to purchase two Australia-based vanadium projects, Toolebuc and Flinders River; the company plans to bring them together into a project called North Queensland, where the assets are both located.

Vanadium in Australia: The future

Looking ahead, Australia’s vanadium-mining potential is set to grow as interest in vanadium rises.

Demand is anticipated to rise due to the metal’s critical role in battery storage technology, where it is used in vanadium redox flow batteries. This means vanadium mining in Australia could also experience a boom, and the up-and-coming projects mentioned above could bolster vanadium’s growth potential.

For example, Australian Vanadium's Australian Vanadium property was awarded Federal Major Project Status by the Australian government in September 2019 to recognize its national strategic importance; in April 2020, it was awarded State Lead Agency Status by the Western Australian government.

A November 2021 resource update shows the project's total measured, indicated and inferred resource stands at 239 million tonnes at 0.73 percent vanadium pentoxide. It is expected to produce about 11,000 tonnes of vanadium pentoxide annually, accounting for around 5 percent of vanadium output worldwide.

Another Australian vanadium mine under development is Technology Metals' Gabanintha project, a proposed open-pit mine with 29.6 million tonnes of vanadium reserves in the Meekatharra region in Western Australia.

King River Resources is another advanced vanadium developer, and its Speewah specialty metals project has a total measured, indicated and inferred resource of 4,712 million tonnes at 0.33 percent vanadium pentoxide. This project has developed over the past 10 years into a flourishing vanadium deposit and continues to grow.

Neometals’ permitted Barrambie titanium and vanadium project is being developed as well, with hydrometallurgical developments in the works and updates to follow. Currently, the project has a resource of 64.9 million tonnes of vanadium at 0.82 percent vanadium pentoxide.

Finally, Atlantic (ASX:ATI) acquired the Windimurra vanadium project in May 2016. The property is under development at the moment and is located in Western Australia, near Perth and Mount Magnet. It estimates an annual production capacity of around 7,600 tonnes of high-grade vanadium pentoxide flake.

Given the metal’s bright outlook and the promising new ventures in the works, vanadium in Australia is looking better than ever for investors interested in the battery metals space.

Don't forget to follow us @INN_Australia for real-time updates!

Securities Disclosure: I, Isabel Armiento, hold no direct investment interest in any company mentioned in this article.

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