Globally, the precious metals industry is one of the most lucrative. Gold industry alone is estimated to be a $7 trillion market while the current gold reserves are estimated to be worth $2.5 trillion. This is larger than all European sovereign debt markets. More than that, gold is heavily traded with almost $200 billion per day changing hands in Futures, ETFs markets. The only US and Japanese government bonds are more liquid than gold. The gold production has also continued to grow in size over the years. In 1971, the mine production was 1,518 tonnes while in 2017, it reached 3,169 tonnes. This represents an annual growth of 1.5%. The dollar value growth rate is rising being only $2.2 billion in 1971 to $127 billion in 2016.
This shows that gold continues to be one of the world’s most valuable assets and any investor holding gold is expected to continue to generate high returns.
The diamond market, though smaller than gold is more diversified since diamond has more use cases. The market is divided into three main segments:
- Industrial diamonds: they are used for manufacturing processes as their physical properties are harnessed.
- Jewelry diamonds: they are used as gemstones in jewelry. This makes up about 60% of the market use cases and most widely adopted.
- Investment diamonds: these are high-quality large gemstones and they often have unique characteristics and they are purchased for investment.
Most of the diamond-producing countries are developing countries with Botswana being the world leader with more 31% of all global diamond production. 36% of Botswana’s GDP is derived from diamonds while also accounting for 82% of the country’s value of exports. Other major diamond producing countries are Australia, Russia, South Africa, Congo, and Canada.
Copper mining is more widespread than the other two main precious metals: gold and diamond.
Chile is the leading producer with 32% followed by China with 8%. The USA accounts for 7% while for Australia, it is 6%. Europe accounts for 4.6% of global production which in 2016 was 216 kilotons. The main copper mines in Europe are located in Sweden, Spain, Poland, Portugal, and Finland.
Copper mining provides more useful by-products and is used in electrical engineering, machinery, precious instruments, clocks, watches, shipbuilding, construction, automobiles among others. This makes copper very valuable. Nonetheless, the cost of mining is expensive but with proper mining equipment and personnel, it has valuable returns.
United States Geological Survey (USGS) found out that there are 720 million tons (Mt) of copper reserves around the world. The undiscovered copper resources are much higher and estimated to be between 2,100 Mt and 3,500 Mt. This does not take into account the vast amount of copper that is untapped in deep seas and land-based sulfides. Therefore current and future exploration opportunities are massive for companies with resources.
Manganese is the main alloying material used in the steel making process. This makes it an important component in the trillion-dollar steel industry. The total economic value of global manganese (Mn) ore production industry in 2013 was $22 billion. Manganese alloy production is much bigger at $146 billion per year. The total wages estimated to be $ 4 billion with direct and indirect employment creating hundreds of thousands of jobs every year. Apart from steelmaking, manganese is also an important component in other non-metallurgical applications such as
batteries and other chemicals.
Coal and Anthracite
Coal is currently the top consumed product in industrial processes. Since the industrial revolution, coal has played a crucial role in the growth of industries and economies throughout the world. As of 2017, China is the world’s leading consumer of coal with 1.8 million tons of oil which is 51% of the world’s coal consumption. India is second with 424 million tons with the United States coming third with 332 million tons. The European Union, Japan, Russia, and South Korea are also significant coal consumers.
Coal production and usage is expected to grow in the medium term with countries such as China and India continuing to show increased demand. Two-thirds of the world’s coal consumption goes to electricity production.
Anthracite is a hard component of coal with the highest concentration of carbon amongst all the other types of coal. It is one of the most preferred PCI (pulverized coal injection) products and it is highly used in blast furnaces in countries such as India and China.