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Mobile Investing in Australia
After lagging behind for a prolonged period, Australia's tech sector is ramping up at an accelerated pace. The tech sector is now equivalent to 8.5 percent of the country's GDP as of the end of 2021, an increase of 26 percent since the onset of COVID-19 through June 2021 and a massive 79 percent increase over the past five years. Tech contributes AU$167 billion to the Australian economy, trailing only the mining (AU$205 billion) and financial/insurance (AU$169 billion) sectors.
Australia's characteristically resilient economy — which had not experienced a recession in nearly 30 years prior to COVID-19 lockdowns — has provided a sturdy backdrop for its growing tech sector. The growth in the tech sector’s contribution to the GDP has outpaced average growth of other industries by more than 400 percent, a gain partly attributable to accelerated digital technology adoption during the pandemic.
This dramatic expansion is largely in response to Australia's need to catch up to the rest of the world and assert itself in the global tech marketplace. Should the tech sector continue to grow at its current rate it will eventually surpass the relative GDP contribution of the long dominant mining sector. This will also complete the process of bringing Australia more in line with other western economies such as the UK, and notably Canada, which is comparable to Australia in terms of its dominant mining and agricultural industries.
In terms of digital innovation earnings as a percentage of GDP, for example. Australia stands at 7.4 percent, significantly behind the 11.2 percent average for companies that are part of the Organisation for Economic Cooperation and Development (OECD). According to its September 2021 Policy Primer report, the Australian Academy of Sciences called for the federal government to place greater emphasis on supporting emerging digital technologies.
"Australia risks falling behind as a technologically-driven nation unless we recognise emerging digital technologies as a central, independent sector in its own right, warranting investment in the core aspects of research, innovation, and workforce development," the report stated.
Understanding Australia's mobile tech landscape
One of the drivers of Australia's tech sector expansion is its booming mobile telephone industry. This expansion has taken many forms ranging from expanded use of mobile telephony, adoption of blockchain technology for supply chain management and the rise of the cryptocurrency market. The application of mobile tech to the banking industry is just one space where mobile usage has become key and is expected to continue developing. According to research firm KPMG, digital platforms will become the preferred and dominant business model form.
Chase Bank completed a survey revealing that the COVID-19 pandemic has accelerated the adoption of mobile banking technology. Banking apps allow users to deposit cheques, pay bills and perform transfers from their mobile device.
One critical side effect of COVID-19 has been the way lockdowns and related restrictions on behaviour has changed the way people live and work. Remote working conditions and enforced isolation has triggered increased demand for improved connectivity and internet speeds to facilitate this transition in corporate culture during the pandemic.
As a result, Australia's leading mobile telephony giants have been obliged to improve data capacity and speed, especially in regional areas that have badly lagged behind urban coverage. Some people have relocated to regional areas — where connectivity remains a challenge — and others are requiring more data capacity and fast speeds to allow them to work more efficiently from home.
The Australian mobile sector is dominated by three main players: Telstra (ASX:TLS), Optus — a subsidiary of Singapore-based Singtel (SGX:Z74) — and TPG Telecom (ASX:TPG). Telstra is the largest provider of mobile services with 48.7 percent market share followed by Optus at 26.3 percent.
In 2022, there have already been several major new developments in the Australian mobile sector. One such event has been the tentative network sharing agreement announced in February between Telstra and TPG Telecom, which brings an end to the bitter rivalry between the two competitors. The agreement provides a comprehensive framework for the two telecom giants to share mobile telecommunication infrastructure across Australia.
TPG and Telstra will both enjoy significant savings and benefits from this arrangement. Telstra will reap up to AU$1.8 billion in added revenues while gaining access to TPG's spectrum that expands Telstra's fixed wireless services in regional areas. Correspondingly, TPG gains access to 3,700 Telstra towers in regional areas; this means TPG does not have to spend significant money to duplicate the infrastructure for its own use.
In addition, Telstra announced earlier in the year that it will spend up to AU$1.6 billion on new infrastructure intended to improve connectivity and internet speeds as part of its response to the overall need to accommodate rising consumer demand in the wake of the pandemic.
What's the outlook for mobile tech in Australia?
One of the positive side effects of the pandemic has been the increasing adoption of wireless services by Australians and the ownership of internet-of-things devices that are prevalent in nearly all households.
According to GlobalData, a data and analytics company, mobile sector revenue in Australia is expected to grow from AU$9.6 billion in 2021 to AU$11.2 billion in 2026 at a compound annual growth rate of 3 percent. This revenue growth will mainly accrue from growth in the mobile data subsector.
Meanwhile, the three leading telephone companies will not only be expanding their 4G services but rolling out 5G networks across the country. 5G allows for improved and additional smartphone services and also enhances fixed wireless services that are competitive with higher speed National Broadband Network (NBN) connections.
In addition, low earth orbit satellite services are beginning to roll out in Australia led by Elon Musk's SpaceX's Starlink service that offers broadband connections delivered via its satellite network.
Overfall, the winding down of restrictions due to COVID-19 will likely see the big three companies enjoy higher revenues in 2022 after declines in earnings owing to the pandemic. Telstra, Optus and TPG Telecom all experienced significant earnings drops between 2020 and 2021 due to reduced international roaming fees, softening demand for headsets and ongoing adoption of NBN services.
But the outlook for 2022 is positive given overall improved economic prospects as Australia emerges from the pandemic, which actually increased overall consumer use of communication services in 2021.
Lockdowns resulted in increased consumer uptake of online services such as online shopping, data-intensive video streaming and the additional household usage of communication services. Indeed, in 2021, data traffic reached record highs as Australian consumers demanded improved internet speeds and unlimited data plans. Remote work will likely continue to remain elevated in 2022 and beyond, which should reinforce increased consumption of home communications services.
Telstar and TPG Telecom in particular are embarking on long term strategies that will drive future earnings growth via accelerating 5G adoption, expansion in dark fibre, and increased adoption of new services such as edge/cloud computing.
Don’t forget to follow us @INN_Australia for real-time updates!
Securities Disclosure: I, Harold Von Kursk, hold no direct investment interest in any company mentioned in this article.
Revenue from Australia's mobile sector is expected to grow from AU$9.6 billion in 2021 to AU$11.2 billion in 2026. Here's what to know about this industry.
Decentralised Finance: How Australia Fits into the Picture
DeFi, short for "decentralised finance," is a promising component of our brave new crypto world. The DeFi sector in Australia is here to stay, but what should investors know about this space?
DeFi offers an alternative to traditional financial services and institutions by bypassing banks, brokers, exchanges and other "middlemen" that serve as financial intermediaries that regulate the markets. In effect, DeFi is evolving into a parallel financial framework that facilitates and records transactions involving financial instruments and payment mechanisms chiefly related to trading and lending operations.
The DeFi market is currently expanding at an explosive rate. According to figures released by DeFi Llama, cryptocurrency investors have put up US$250 billion worth of assets as collateral in various DeFi projects, funds which are then lent out in the form of cryptocurrency loans. As more and more institutional investors enter the DeFi sector, the market is expected to expand to US$800 billion by the end of 2022.
Bitcoin and Ethereum, the world's two leading cryptocurrencies with market caps of US$882 and US$421 billion, respectively (as of the beginning of April), are digital assets whose ownership is documented in a public transaction ledger known as the blockchain. A traditional financial institution such as a bank, credit card provider or payment facilitator like PayPal maintains its own private records and uses its own servers to process transactions. Cryptocurrency transactions, by contrast, are processed on the computers of a global network of users and recorded publicly (though pseudonymously) for the entire network to see.
As currently constituted, the emerging DeFi sector provides holders of cryptocurrency the ability to bypass the world's traditional network of bank and other financial gatekeepers by means of independent, self-regulating computer programs that rely on blockchain technology.
These decentralised applications (DApps) of blockchain technology offer a more efficient and streamlined mechanism to access financial services by creating an alternative ledger system known as "distributed ledger technology" (DLT) as opposed to VISA, PayPal or other legacy digital payment services. By harnessing the power of blockchain, a new global ledger system has taken shape that relies on a global web of interconnected computers to record and tracks all transactions. Not only does DLT store such transaction data but it also identifes the parties involved in any transaction.
This allows anyone with a crypto wallet and an internet connection unlimited access to DeFi services. Users can trade currencies and move assets whenever and wherever they want and avoid antiquated and cumbersome bank transfer protocols and related fees. DeFi users are, however, required to pay "gas fee" charges for crypto transactions in many cases.
DeFi is thereby expanding the fundamental premise of digital money — bitcoin and other cryptocurrencies — by allowing individuals and companies alike to execute financial transactions by means of a new and fully transparent system.
DeFi Applications
Lending platforms
The DeFi market is currently expanding at an explosive rate. According to figures released by DeFi Llama, cryptocurrency investors have put up US$250 billion worth of assets as collateral in various DeFi projects, funds which are then lent out in the form of cryptocurrency loans.
Parallel to the expansion of the cryptocurrency market, DeFi will become increasingly able to provide loans via the various lending platforms that are popping up around the world. In effect, DeFi lending platforms are digital banks, taking money from cryptocurrency depositors and lending it out to borrowers.
Instead of traditional bank loans, the DeFi platforms rely on "smart contracts" — primarily the Ethereum blockchain — which uses computer code to authorize, execute and verify transactions.
Lending markets serve as one of the most intriguing and promising applications of DeFi by connecting borrowers to lenders of cryptocurrencies by means of platforms that enable individuals or companies to either borrow cryptocurrencies or provide crypto loans.
In order to obtain a loan, borrowers must put up collateral — usually ether, the crypto currency issued by Ethereum, the principal system on which all cryptocurrency applications are based. Borrowers tend to receive loans in the form of stablecoins pegged to traditional currencies like the dollar.
Alternatively, borrowers can post collateral in the form of bitcoin, which then gets deposited in a crypto pool that is overseen by a smart contract. Should the price of bitcoin take a precipitous fall, the smart contract automatically liquidates the collateral to protect depositors who have provided the loan funds in the form of stablecoins. Meanwhile, lenders earn money from the interest rate the platforms charge for lending out their funds.
Decentralised exchanges
Decentralised exchanges use smart contracts to enable traders to execute orders without an intermediary. Users trade directly from their wallets by exchanging one currency for another, for example Bitcoin for US dollars or euros for Ether, by means of the smart contracts behind the trading platform. Traders are solely responsible for managing and securing their funds and risk losing their holdings if they lose their private keys or send funds to the wrong addresses. The advantage of bypassing financial intermediaries and preserving anonymity is offset to a degree by the lack of security a bank or a centralized exchange provides.
Stablecoins
A stablecoin is a cryptocurrency pegged to the value of a non-crypto asset (i.e. the US dollar) that offers price stability, which in turn provides greater security for DeFi collateralized lending. Tether is one of the leading stablecoins.
Australia: Making a splash in DeFi
Australia currently ranks 12th out of 154 countries according to the Global DeFi Adoption Index published by Chainanalysis. This index uses three metrics in its assessment of DeFi adoption: on-chain cryptocurrency value received by DeFi platforms weighted by public private partnership (PPP) per capital, total retail value received by DeFi platforms and individual deposits to DeFi platforms.
Australia's DeFi sector is currently experiencing a boom led by various companies such as Synthetix (SNX), which hopes to become a decentralised version of derivatives exchange BitMEX; Maple Finance (MPL), which offers loans for crypto institutions; and newly launched tiiik, which offers a digital wallet that allows investors to earn interest on DeFi products. Other new Australian DeFi players include Thorchain, Ren and mSTABLE.
While the DeFi sector is currently in its first developmental phase much like Bitcoin in its early days, individual investors have three main ways of investing in this evolving industry. First, one can obtain cryptocurrency-based loans; second, one can earn interest by lending (staking) their crypto holds, looking to invest in DeFi coins. Block Earner, for example, is an Australian fintech outfit that provides a DeFi online savings platform, which pays 7 percent interest on deposits. Third, investors can simply invest in DeFi coins in the same way that one can purchase cryptocurrencies.
Evolving market
Investors willing to take a plunge in DeFi should be aware that the underlying volatility of the cryptocurrency markets can rattle the DeFi sector in the event of sharp declines in bitcoin, Ethereum and other cryptos. There is also the added spectre of rug pulls, a relatively rare but catastrophic form of fraud.
Rug pulls see unscrupulous DeFi developers create a new token, pair it to a leading cryptocurrency such as tether, set up a liquidity pool, and then use secret back doors encoded into the coin's smart contract to mint millions of new coins before liquidation. This was the case in 2020 when SushiSwap developer Chef Nomi cashed in his SUSHI tokens after raising over $1 billion in collateral finance, which caused the price of SUSHI to crash to near zero.
Don’t forget to follow us @INN_Australia for real-time updates!
Securities Disclosure: I, Harold Von Kursk, hold no direct investment interest in any company mentioned in this article.
What is decentralised finance and what should investors know about this space in Australia? Find out here.
Investing in Silver Bullion in Australia
When one thinks of investing in precious metals, gold is often seen as the main option owing to its historical profile as a safe haven metal and hedge against inflation and stock market volatility. However, investors should also consider silver as an attractive alternative to gold with equal if not greater upside potential.
In a February interview with Investing News Network, David Morgan of the Morgan Report said he expects silver to break through the US$30 per ounce mark in 2022 and trade in the US$33 range. That would represent a gain of more than 30 percent over the current price of silver, which was trading in the range of US$24 to US$25 as of April.
While the price of silver tends to rise and fall alongside that of gold, silver's valuation is generally more volatile — slower to move in either direction, but more prone to abrupt spikes and plunges. Interestingly, over the last five years, the price of silver has risen by approximately 25 percent, an almost identical increase to that of gold. In addition, silver has tended to outperform gold during bull markets.
More recently, silver prices soared more than 45 percent in 2020, fell about 10 percent in 2021 and were up roughly 7 percent as of April 2022 compared to only a 5 percent gain in gold prices for the current year.
Another interesting point in favour of silver investing is how it has outperformed gold by a wide margin over the course of the precious metal rally that got underway in earnest in mid-July of last year. Since then through April 2022, silver had risen by over 30 percent as compared to only 8 percent for gold.
Certainly, most analysts expect commodity and precious metals prices in general to continue rising in 2022 in the wake of ongoing supply chain disruptions and further uncertainty due to the Russian invasion of Ukraine. This is all the more reason for investors to consider silver as an alternative investment.
One characteristic of silver that distinguishes it from gold is its far greater role as a key industrial metal. It is estimated that industrial usage accounts for about 50 percent of overall demand for silver with the other 50 percent accounted for by silver investors and speculators, including jewelry and silverware.
Rising industrial demand for silver ― apart from being caught up in the overall rally in precious metal prices since mid-2021 ― is a major reason why the metal has outperformed gold lately. Silver is also an essential component in clean energy, particularly in the fast-growing solar energy and electrical vehicle (EV) sectors. Silver's conductivity and corrosion-resistant properties make it essential for the manufacture of conductors and electrodes.
Virtually every electrical connection in an EV uses silver, and the auto sector overall uses 55 million ounces of silver annually. Additionally, almost every computer, mobile phone and appliance is made with silver, not to mention radio frequency identification device (RFID) chips, which are currently replacing barcodes used in supermarkets and for general inventory purposes.
Australian silver market
Some shrewd investors are looking to Australia for their silver picks. A country whose silver mines continued to flourish even when most of the world was in a precious metal slump, Australia has emerged from the COVID-19 pandemic as a major player in the global silver market.
When you think of mining in Australia, you may not think of silver, especially since the country is a top global producer of several other metals, including gold and iron ore. Yet silver mining has a rich history in Australia, and Australian mining and metals giant BHP (ASX:BHP,NYSE:BHP,LSE:BLT) started out as a silver operation in the 1920s.
Today, silver is back on the rise in Australia. Several important new silver mines have recently been opened and the potential for further exploration and production is even higher in the wake of the recent price surge of the precious metal over the last two years.
Australia is now tied with Poland and Russia as the fifth largest silver producer globally as of the end of 2021. Mines in Australia churned out 1,300 tonnes of silver in 2021, a slight drop from 1,340 tonnes in 2020.
Those looking at the Australian silver market have options. There are plenty of big players with interests in Australian silver, and many smaller players for investors to consider researching too.
Most silver comes from mines dedicated to other metals ― Glencore's (LSE:GLEN,OTC Pink:GLCNF) Mount Isa in Queensland produces mainly copper, zinc and lead, but silver is separated by the company's integrated processing streams. Glencore also operates the McArthur mine in the Northern Territory, which is primarily zinc. Between its copper and zinc assets, Glencore produced 7,404,000 ounces of silver in Australia in 2020 ― over 200 tonnes.
Elsewhere, BHP produces a lot of silver as well at the Olympic Dam operation in South Australia. Perhaps best known for the production of uranium and copper, it also yields significant silver resources to the tune of 984,000 ounces in 2020, or almost 28 tonnes.
South32 (ASX:S32,OTC Pink:SHTLF) runs Queensland's Cannington mine, which produces more silver than any other in the country. The company claims it is one of the world’s largest and lowest-cost silver producers.
Meanwhile, global demand for silver is on the rise and is expected to reach 1.11 billion ounces in 2022, an increase of nearly 100 million ounces compared to last year's record figure of 1.03 billion ounces.
All this bodes well for the price of silver in 2022 as both industrial demand and consumer demand ― in particular from India, where COVID-19 limited silver purchases in 2021 ― are expected to rise this year.
Investing in silver bullion in Australia
Investing in physical silver is the most straightforward option: you simply buy a tangible piece of the precious metal in the form of bullion, official coins or medallions. Bullion comes in the form of bars or solid silver coins with at least 99.9 percent purity. Official silver coins are currency produced by a government mint, while silver medallions resemble coins, but lack monetary value.
The price of physical silver will rise and fall alongside the metal's spot market value. Physical silver is a relatively safe investment, although if you plan to trade often, the added costs of buying, selling and storing physical silver may make the investment not worth your while.
Investments in physical silver rose by 8 percent last year, boosted by silver's status as a safe asset and market bullishness on gold. In Australia, coins and medals fabrication increased by 35 percent year-over-year.
Silver bullion bars
Minted silver bars are available for purchase in various sizes. The 1,000 ounce silver bar is the industry standard for trading, but will normally oblige an investor to pay for storage fees at a reputable bullion dealer. For investors wishing to buy silver in large quantities, cast and minted bars are the best option.
Many investors, however, will prefer to buy bullion in smaller quantities ranging from 1 ounce to 100 ounces. While some individuals may choose to store these bars in home safes, it is recommended that silver bars be kept in safety deposit boxes in banks or with the secure storage facilities provided by bullion dealers such as the Royal Australian Mint, Perth Mint, Sydney Mint and Melbourne Mint.
Silver coins
Purchasing silver coins offers the advantage of being able to buy silver bullion in smaller quantities anywhere from 1/10th of an oz to 1 oz, thereby making it easier to accumulate physical silver over time. Many minted silver coins comes with various design features that add to the cost of the coin above spot price.
Be wary of premiums
As mentioned above, purchasing special coins will cost extra compared to a basic silver ounce coin. Additionally, accumulating small amounts over time will cost more than buying the same amount in silver bars all at once.
Don’t forget to follow us @INN_Australia for real-time updates!
Securities Disclosure: I, Harold Von Kursk, hold no direct investment interest in any company mentioned in this article.
Here's everything you need to know about investing in silver bullion in Australia.
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Table of Contents
- Australian Cannabis Trends 2021: Adoption Growing, Regulatory Changes Still Needed
- Australian Cannabis Outlook 2022: Positive Signs for Sales and Patient Numbers
- Top 3 ASX Cannabis Stocks
A Sneak Peek At What The Experts Are Saying
“2022 will see continued transformation of the industry characterised by wider acceptance of medicinal cannabis, improved access for patients, an increase in R&D investment, and industry players looking to new markets in which to expand.”
— FreshLeaf Analytics
“There is clearly a growing subset of clinicians who are committed to utilising medical cannabis as a regular treatment option for their patients.”
— FreshLeaf Analytics
Who We Are
The Investing News Network is a growing network of authoritative publications delivering independent, unbiased news and education for investors. We deliver knowledgeable, carefully curated coverage of a variety of markets including gold, cannabis, biotech and many others. This means you read nothing but the best from the entire world of investing advice, and never have to waste your valuable time doing hours, days or weeks of research yourself.
At the same time, not a single word of the content we choose for you is paid for by any company or investment advisor: We choose our content based solely on its informational and educational value to you, the investor.
So if you are looking for a way to diversify your portfolio amidst political and financial instability, this is the place to start. Right now.
The Future of Hydrogen in Australia
For decades, hydrogen has been hailed as a potentially revolutionary alternative to fossil fuels. Today, ASX investors are paying increasing attention to the hydrogen sector as the world's leading oil, gas and steel companies ramp up expenditure in this promising alternative energy source.
Australia, like most western nations, is determined to decarbonise its economy as part of the global transition toward renewables. Many industries now face strict targets for reducing emissions, and new technologies are being developed to produce clean, "green" hydrogen that will have a sweeping impact in diminishing the carbon footprint left by Australia's steel and coal industries.
The rapid growth of the Australian hydrogen industry is being driven by massive investments in the "green" hydrogen sub-sector as opposed to the dominant form of "grey" hydrogen that is produced via carbon energy sources.
Now, in the wake of the Russian invasion of Ukraine, the US Biden administration has banned Russian oil imports and there is growing pressure on EU countries to follow suit. This immediately thrusts hydrogen into the spotlight as a key component in a changing landscape where energy security has become a major priority in an unstable political environment.
This is the view of Dr. Andrew "Twiggy" Forrest, Chairman of Australian iron ore giant Fortescue Metals Group (ASX:FMG), which is now investing billions into green hydrogen production as part of an overall plan to transform itself into a clean energy company: "The Middle East has taught us this before and (Russian President Vladimir) Putin is teaching us this now … Green energy plans are our only energy security," Forrest said at the onset of the Russian invasion.
According to Noel Tomnay, global head of hydrogen consulting at Wood Mackenzie, low-carbon hydrogen has enormous potential to capture a growing share of the world energy market, and there is now more need than ever for major hydrogen producers such as Australia to accelerate hydrogen projects that will one day reduce dependency on any single oil and gas supplier.
"There is a serious need to expand the production of green and blue hydrogen to increase the security of supply (in light of bans on Russian oil)," Tomnay said.
Tomnay, one of the authors of a major hydrogen study on behalf of Wood Mackenzie, believes that Australia must join other countries in providing alternative energy sources, particularly hydrogen, which, like liquified natural gas (LNG), can be chilled and liquefied for transport on ships. It can also be blended with natural gas in the pipeline stream to reduce carbon emissions.
"The world needs to be buying fuel from many more and varied suppliers by reducing dependence on any one supplier. As Europe is becoming increasingly reliant on LNG, instead of importing it from just a couple of countries, you're going to need to develop green hydrogen and produce LNG from Chile and Australia and Africa and Morocco and thereby broaden the range of potential suppliers in the near and medium term."
The world’s three largest LNG importers — China, Japan and South Korea — along with the EU, have all set targets for net-zero carbon emissions. Hydrogen is an essential component if these goals have any hope of being met.
Royal Dutch Shell CEO Ben van Beurden has stated that without hydrogen in the energy mix by 2050, “we cannot aim to be a net zero economy.”
"There is lots of potential for green hydrogen in Australia, Canada, and the Middle East. It's a global market and all the new projects will be looking for global exports and additional offtake customers," Tomnay said.
Australia's virtually limitless solar power capacity also gives it a natural cost advantage over other global producers, and Australia's private sector is ideally positioned to become a leader in the production of green hydrogen.
Green, blue and grey hydrogen
Green hydrogen is defined as hydrogen produced by splitting water into hydrogen and oxygen using renewable electricity. This is a very different pathway compared to both grey and blue.
At present, global hydrogen production is almost entirely derived from the reforming of natural gas via steam methane reforming (SMR) or using other hydrocarbons such as gasified coal or gasified heavy oil residues.
Grey hydrogen is mainly produced using coal that results in very high CO2 emissions that rival that of combined emissions of UK and Indonesia. It has no value as a transitional energy source.
Blue hydrogen differs from grey in that it uses carbon capture technology to capture 85 to 95 per cent of the CO2 produced when hydrogen is split from methane (or from coal) and stores it for long term. Blue hydrogen thereby significantly reduces the environmental impact of hydrogen production; however, it is not fully effective at stopping the emissions.
This is why green hydrogen represents the future of the sector as it looks to shift away from these carbon-intensive processes. Green hydrogen leaves no carbon footprint and thereby offers the world an unlimited source of clean energy in the near future. But due to its comparative cost disadvantage, green hydrogen currently accounts for less than 1 percent of hydrogen production in Australia
This is precisely the gap that Australian energy giants such as Fortescue, Woodside Petroleum (ASX:WPL) and Wesfarmers (ASX:WES) are in the process of filling with various green hydrogen projects.
FMG Chairman Forrest has no doubt that his massive commitment to green hydrogen is exactly the kind of clean energy strategy that the world needs if it is to avoid the worst effects of climate change.
"It’s like being there at the beginning of the industrial revolution," he said. "Someday you’ll look back and say, ‘I was there.' Global warming … is really serious, and it’s accelerating a lot quicker than anybody thought … I’ve been in mining for 20 years, and nothing has really changed until now. (But) if you are responsible, you must act."
Meanwhile, Woodside has unveiled plans to produce hydrogen at three locations in Australia and overseas. The H2Perth hydrogen facility in Western Australia announced in October last year is expected to begin operations in 2027. It will produce over 500,000 tonnes of hydrogen per year.
The initial phase of the project would produce a combination of blue and green hydrogen, but Woodside CEO Meg O'Neill has stated that "H2Perth is designed to be net-zero emissions for both Woodside and its customers," and that 100 percent of carbon emissions will be either stored or offset.
Wesfarmers' wholly owned subsidiary Coregas, a leading gas producer, is participating in the Hydrogen Energy Supply Chain (HESC) gasification plant in Latrobe Valley, Victoria. Coregas intends to ship the hydrogen produced at this facility to Japan and eventually turn it into the largest hydrogen hub in the world
Australian government commitment to hydrogen
In 2019, Australia unveiled its National Hydrogen Strategy, which seeks to stimulate the development of the hydrogen sector and encourage its leading corporations to invest in hydrogen projects. Last June, the government announced that it will be investing AU$1.4 billion in the country's hydrogen industry as part of an effort to turn Australia into a major global player by 2030. To that end, Prime Minister Scott Morrison announced a joint hydrogen development program with Germany.
Under the terms of this agreement, Australia will gain access to highly advanced German hydrogen technology that will help Australia build up its capacity to export significant quantities of hydrogen to Germany as part of the European superpower's policy of reducing reliance on fossil fuels.
Australia is also partnering with Japan on the development of new hydrogen fuel cell technology and the establishment of the world's first clean liquefied hydrogen export pilot project. In addition, important bilateral agreements have been reached with Singapore (accelerating low emissions technologies) and Korea (collaborating on research into hydrogen supply chains and low and zero emissions technology).
Though Australia is primed to become one of the world's leading hydrogen producers, there are major issues on the demand side of the equation. Martin Tengler, senior hydrogen analyst at BloombergNEF in Tokyo, believes that the future market for Australian green hydrogen is still much less than what is needed to soak up the supply once many of the new production facilities come on line.
"My outlook for Australia is that there are many projects for clean hydrogen in the pipeline and most are geared towards the exporting hydrogen in the form of ammonia and towards exports to Japan and Korea," Tengler said.
"But these projects face an uncertain future, however, because Japanese demand needs to pick up in order to absorb all the planned supply from Australia. It is great that Australia has all these projects in development but the challenge going forward will be to find enough demand."
Tengler, one of Asia Pacific's leading experts on the global hydrogen industry, is highly impressed with all the new Australian initiatives in the field but warns of possible bottlenecks down the road.
"Fortescue, for example, needs to find buyers willing to sign long-term contracts for the green hydrogen it intends to produce over the long term. This is the biggest challenge they are facing."
Currently, the hydrogen market is valued at over US$100 billion and issued widely as an industrial chemical, mainly by the petroleum industry, for the production of ammonia, a principal ingredient in the manufacture of nitrate fertilizer. There is also growing demand for hydrogen by companies anxious to harness its properties as an effective means of storing power. But none of these applications for hydrogen compare to its extraordinary potential as a viable, clean-energy fuel for transportation, particularly in trucks, airplanes, and ships.
These essential means of transportation are difficult to decarbonise due to the weight of batteries and their inability to hold sufficient charge for long-haul trips. Hydrogen, however, offers a much lighter alternative as a clean-burning fuel that would go a long way to eliminating carbon emissions in the transport sector.
"Australia has a lot of renewables and a lot of states have ample room to place solar panels and build windmills," Tengler said. "But the biggest challenge is to find enough buyers because of the shipping costs and distances involved. And there will be competitors from Spain in the Iberain Peninsula, Chile, Namibia, Brazil and Canada. They all want to sell hydrogen to Japan and Korea … I would be wary about hydrogen export potential from Australia for the time being until Australian exports are able to sign long term export agreements."
Don’t forget to follow us @INN_Australia for real-time updates!
Securities Disclosure: I, Harold Von Kursk, currently hold no direct investment interest in any company mentioned in this article.
The rapid growth of the Australian hydrogen industry is being driven by massive investments in the "green" hydrogen sub-sector.
EV Copper Use to Rise, How Australia Can Help Fill Demand
One of the key steps to reducing our carbon footprint is decarbonising the transport sector. To that end, the world's leading car and truck manufacturers are racing to develop battery-powered electric vehicles (EVs) that will ultimately bring about the end of the internal combustion engine (ICE).
According to the International Energy Agency, EVs comprised 9 percent of total global vehicle sales in 2021 as electric car sales more than doubled to 6.6 million — that's triple their market share from two years earlier.
Australia is no exception — sales in the country tripled in 2021 to 20,665 EVs, up from 6,900 in 2020. Market share came in at 2 percent of all car sales in the nation versus 0.78 percent in 2020, as per the EV Council of Australia.
Overall EV sales are expected to rise to 26.8 million in 2030. This impressive growth in EV adoption represents an opportunity for investors, but also places tremendous pressure on mining companies to keep pace with demand for battery metals such as lithium, cobalt and of course copper. All of these are needed to produce the cars, and perhaps more significantly, the batteries that power them.
Copper's key role in electric vehicles
As mentioned, battery metals like lithium and cobalt are more commonly in the spotlight when it comes to the EV story. But copper has a key role that is only gaining more attention as time goes by.
According to Wood Mackenzie, EVs can use up to three and a half times as much copper as ICE passenger cars. Battery-powered buses, a key aspect of public transportation, are even more copper intensive, using between 11 and 16 times more copper than similar ICE passenger vehicles, depending on the size of the battery and the bus.
Due to its superior conductivity, EVs coming off assembly lines today rely on extensive copper wiring to connect their battery packs to vehicle electronics, while their batteries contain 8 percent copper on average.
What's more, it's estimated that eight times more lithium, nickel and copper will be required for annual EV production in 2030 compared to today — and that is a low forecast assuming only 40 percent EV sales penetration.
Notably, Morgan Stanley (NYSE:MS) has argued that copper is "the new oil" in recognition of how the metal has become an integral component of sustainable technologies as part of a "new industrial order," particularly with respect to EVs and other industrial sectors that rely on clean energy.
Meanwhile, in a May 2021 report, investment bank Goldman Sachs (NYSE:GS) states that "copper will be crucial in achieving decarbonization and replacing oil with renewable energy sources, and right now, the market is facing a supply crunch that could boost the price by more than 60 percent in four years." In addition, the firm predicts that by 2030, copper demand will grow nearly 600 percent to 5.4 million tonnes.
Does this mean that there will be a copper crunch between now and then?
"There is a question mark over whether miners can deliver enough supply for all applications of copper," Eleni Joannides, research director for copper at Wood Mackenzie, explained to the Investing News Network. "If you just consider EVs alone, in most of the world outside China, the extra demand for copper foil for EV batteries will be supplied by scrap. In China, it will be a mix of scrap and refined copper. Even under the most optimistic scenarios, EVs will represent only a small part of total copper demand."
Joannides does not believe that the world's leading EV manufacturers will face a battery shortage owing to a shortfall in copper supply. "It is unlikely that copper in and of itself will threaten battery production given all the other commodities required which have their own supply/demand dynamics. In the meantime, the copper foil industry is making good progress in announcing and building new projects and expansions across the globe."
That said, in the wake of Russia's invasion of Ukraine, along with a projected sustained period of higher oil prices, consumers may shift in even greater proportions away from ICE vehicles and toward EVs. Should prices for copper and the other metals required for battery production continue to soar as they have in recent months, battery manufacturers may pass the costs along to EV manufacturers — their sales figures could be blunted by consequent higher sticker price costs.
Joannides thinks copper will likely rise beyond the three to five year horizon. "This will have to be reflected in battery prices, and this may well affect the profitability of EV battery manufacturers. This could lead to difficulties in the market if EV battery prices become so expensive that EV makers are not prepared to pay for it," she said.
Will copper miners be able to meet demand?
One of the overriding concerns among transportation industry observers is the possibility of future supply chain bottlenecks for global metal producers. Although lithium receives most of the attention when it comes to EV sector commodities, copper is becoming an increasingly vital concern to the industry.
Within the last two years alone, the price of copper has more than doubled from a low of US$2.30 per pound to an all-time record high of US$4.78 at the beginning of March 2022.
Given the stagnation in copper production over the short term compared growing EV sales and corresponding demand for batteries, prices should be expected to stay at high levels and continue to rise over the course of the decade until new mining capacity is created.
However, Wood Mackenzie Principal Copper Analyst Will Tankard argues that copper supply shortage forecasts tend to be exaggerated. "There is always a projected supply gap in the copper market, but it never materialises, either because demand is weaker, or supply is stronger or there is more scrap available," he said.
"Scrap has always played a role as a buffer to the market, and in Wood Mackenzie’s view, scrap is likely to continue to increase its role as another avenue of supply. A look at the copper price signals clearly that the gauntlet has been laid down to the industry to deliver long-term copper production to enable the energy transition. The role of scrap, and thus the availability of scrap into the market, is also developing," added Tankard.
But all that might change as the world emerges out of the COVID-19 pandemic and demand for EVs accelerates. This is especially true in the current climate of rising oil prices, which have skyrocketed past the US$100 per barrel price point in 2022, making the comparative operating costs for EVs far more attractive compared to ICE cars.
This is the view of Bloomberg Senior Metals and Mining Analyst Yi Zhu, who last September said that copper demand will continue to rise in the face of rising demand for EV batteries.
"We think Doctor Copper can get capital boost at oil’s expense, as crude oil is vulnerable to EVs,” Zhu said. "Fuel demand may head for a structural decline while copper consumption could surge as battery power infrastructure develops. And capital could switch from oil-related assets to copper-related assets. The copper/oil ratio has traded above the average resistance level before the pandemic, which implies investor anticipation of a possible post-pandemic shift in both commodities’ price patterns."
How Australia's copper sector can help feed EVs
Rising prices may have the effect of incentivising Australian copper producers to increase exploration, expand capacity and otherwise increase production down the road to meet expected demand for the metal.
According to the most recent data provided by the US Geological Survey, Australian copper reserves are the second highest in the world as of 2021 at 93 million tonnes, behind Chile with 200 million tonnes. Australia is also a top 10 copper producer, and exports generated revenues of US$3.82 billion in 2021; industry analysts expect that figure to continue to rise for the rest of the decade and beyond.
The majority of the country's copper resources are concentrated at the Olympic Dam copper-uranium-gold deposit in South Australia and at the Mount Isa copper-lead-zinc deposit in Queensland.
Other significant Australian copper sources are the Northparkes copper-gold, CSA copper-lead-zinc and Girilambone copper deposits in New South Wales; the Ernest Henry, Osborne and Mammoth copper and copper-gold deposits at Selwyn in Queensland; the copper-zinc deposits at Golden Grove in Western Australia; and the Nifty copper deposit, also located in Western Australia.
For more details on copper in Australia, click through the links below:
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Securities Disclosure: I, Harold Von Kursk, currently hold no direct investment interest in any company mentioned in this article.
Lithium receives most of the attention when it comes to electric vehicles, but copper's role is becoming increasingly vital. Australia is positioned to help feed demand.
Hydrogen Investing in Australia
Hydrogen has long been touted as the most important clean energy source of the future. However, 99 percent of hydrogen produced today is derived from power generated by coal or gas.
Thanks to technological advances and massive new investments made by the public and private sector, the industry is now making the critical transition towards clean "green" hydrogen — in other words, hydrogen that is produced via zero-carbon and low-carbon energy sources.
Australia, like most western nations, is determined to decarbonise its economy as part of the global transition toward renewables. Many industries now face strict targets for reducing emissions as part of the drive to lessen the carbon footprint left by Australia's steel and coal industries.
Although hydrogen is generally seen as a long-term investment play given the many years it takes to build new plants and add capacity in the market, last year saw investors rush to get in on the ground floor of the rapidly expanding Australian green energy market as smaller players began to make their mark.
In 2021, the ASX hydrogen sector saw some exponential gains in the share prices of several up-and-coming players, including Province Resources (ASX:PRL), Pure Hydrogen (ASX:PH2), Sparc Technologies (ASX:SPN), Environmental Clean Technologies (ASX:ECT) and QEM (ASX:QEM). These five companies led the way in driving interest in the kind of opportunity that the Australian hydrogen industry represents, both in the short and long term. Several key public/private partnerships also played a role in stimulating market interest.
Hydrogen investing in Australia: What is hydrogen and how is it used?
Hydrogen is the most abundant element on Earth. It is a colourless gas that can be burned to generate electricity, or alternatively can be combined with oxygen atoms in fuel cells. Hydrogen can be produced in gas or liquid form, and has the ability to replace fossil fuels in household heating, transportation and industrial manufacturing processes like steelmaking, which consumes massive amounts of power.
As a fuel, the great advantage of hydrogen is that it produces no carbon emissions, only water as a by-product. First discovered 250 years ago by English physicist Henry Cavendish, hydrogen was initially used in combination with oxygen to power internal combustion engines, hydrogen gas blowpipes and hydrogen gas lamps. It was later used in the construction of hydrogen-lifted airships and German Zeppelins until passenger service was abandoned after the tragic 1937 explosion of the Hindenburg Zeppelin in New Jersey, which killed 36 people.
Currently, the hydrogen market is valued at over US$100 billion, with the material being used widely as an industrial chemical, mainly by the petroleum industry for the production of ammonia, a principal ingredient in the manufacturing of nitrate fertiliser.
There is also growing demand for hydrogen by companies anxious to harness its properties as an effective means of storing power. But none of these applications for hydrogen compare to its extraordinary potential as a viable clean energy fuel for transportation ― particularly in trucks, airplanes and ships.
These essential means of transportation are difficult to decarbonise due to the weight of batteries and their inability to hold sufficient charge for long-haul trips. Hydrogen, however, offers a much lighter alternative as a clean-burning fuel that would go a long way to eliminating carbon emissions in the transport sector.
Hydrogen investing in Australia: Big players and government investment
Aside from the smaller-cap companies mentioned above, several major Australian energy companies, including Fortescue Metals Group (ASX:FMG,OTCQX:FSUMF), Origin Energy (ASX:ORG,OTC Pink:OGFGF) and Wesfarmers (ASX:WES,OTC Pink:WFAFF), are now rapidly expanding their investment in the hydrogen sector.
Clearly, if hydrogen is now in the process of realizing its potential as a replacement for oil- and coal-generated electricity, the leading steel, coal and gas producers may be well-positioned to bring about this shift in the energy mix. They possess the requisite financial might and technological/engineering expertise to become dominant players in the hydrogen sector as they assume their role in the transition from fossil fuels to renewable energy.
Aiding this growth in Australia's hydrogen industry is government support. The EU, for example, paid nearly half of the US$23 million cost of Shell’s (LSE:SHEL,NYSE:SHEL) Rhineland project, while Queensland has partnered with Fortescue on a AU$1 billion hydrogen project in Gladstone.
Last year alone saw a doubling in the number of newly announced large-scale hydrogen projects to over 500, as per a Hydrogen Council report. Nearly 75 percent of these long-term plant, port and pipeline projects are expected to be completed by the end of the decade, with 40 percent already funded or under construction.
Meanwhile, the Australian government is in the process of investing AU$1.4 billion in its domestic hydrogen industry as part of a growing global drive towards net-zero emissions. Australia's National Hydrogen Strategy intends to grow this industry and position Australia as a major player by 2030.
Aside from that, Australian Prime Minister Scott Morrison has set out an Australian technology roadmap that intends to pour a total of AU$20 billion into clean hydrogen, energy storage, low-emission steel and aluminium, carbon capture and storage and solar.
In June 2021, Morrison announced a joint hydrogen development program with Germany under which Australia will gain access to highly advanced German hydrogen technology, strengthening Australia's ambitions of becoming a leading hydrogen exporter. This will help Australia build up its capacity to export significant quantities of hydrogen to Germany as part of the European country's policy to reduce reliance on fossil fuels.
Australia will also be partnering with Japan (to develop new hydrogen fuel cell technology and establish the world's first clean liquefied hydrogen export pilot project), Singapore (to accelerate low-emission technologies) and Korea (to collaborate on hydrogen supply chain research and low- and zero-emission technology).
Hydrogen investing in Australia: Long-term outlook
The promise of Australia's hydrogen market is strong — indeed, the Australian Renewable Energy Agency believes the space could be worth up to AU$10 billion annually by 2040, at which time the country would be putting out over 3 million tonnes of renewable hydrogen on a yearly basis.
But putting matters into perspective, proposed long-term investments in transitioning towards hydrogen are still dwarfed by Big Oil's average annual expenditure on developing new fields.
In today's early stages, investors looking to enter Australia's hydrogen space have plenty of choices, whether they want to start with the larger players or try their hand at determining which earlier-stage stocks will be successful.
Don’t forget to follow us @INN_Australia for real-time updates!
Securities Disclosure: I, Harold Von Kursk, currently hold no direct investment interest in any company mentioned in this article.
Wondering about the future of hydrogen in Australia? Here's an overview of investing in hydrogen in the country.
