Strategic metals : The return of real assets in a fragmented world

Written By APIS AM

A private wealth perspective on industrial sovereignty, energy security and the re-rating of critical resources.

For private wealth investors and allocation professionals

I. STRATEGIC INTRODUCTION

The role of metals in the global economy is changing in nature. Long regarded as mere industrial inputs, whose prices fluctuated in line with macroeconomic cycles, they are now taking on a dimension that brings them closer to strategic assets than to conventional commodities. This transformation is not cyclical. It reflects a profound recomposition of the economic, technological and geopolitical balance of power, in a world that has become structurally more fragmented.

Three forces are converging to reshape this landscape. First, structurally more intense demand, driven by the broad-based electrification of economies, the expansion of artificial intelligence, the transformation of energy systems and the modernisation of defence capabilities. Second, constrained supply, inherited from a decade of chronic underinvestment and now subject to geological, operational and political bottlenecks. Third, a new political economy in which states are once again becoming direct actors in the securing of supply chains, through subsidies, equity stakes, strategic stockpiling and export controls.

Added to this threefold sectoral dynamic is a macroeconomic environment that reinforces the appeal of hard assets. Sovereign debt levels in developed economies, the persistence of inflationary pressures, the prospect of prolonged fiscal dominance and the slow erosion of the unipolar currency system constitute a favourable backdrop for real assets, whether precious metals, industrial metals or listed mining equities.

For the wealth investor, these developments open a field of reflection that goes beyond conventional cyclical analysis. It is no longer simply a question of anticipating a cyclical rebound in commodities, but of integrating critical resources into a long-term strategic allocation logic, structured around industrial sovereignty, energy security and the preservation of real purchasing power.


II. WHY STRATEGIC METALS ARE BECOMING CENTRAL AGAIN

Demand driven by major technological transformations

The return of metals to the heart of the global economy is explained first and foremost by the scale of the needs generated by the technological transformations currently under way. Electrification is no longer a sectoral theme confined to electric mobility or renewable energy: it now runs through the whole of industrial chains, from transport infrastructure to distribution networks, from buildings to data centres.

Artificial intelligence provides a particularly compelling illustration of this dynamic. The proliferation of data centres and intensive computing infrastructure is driving accelerated growth in electricity demand, a rising share of which operators are seeking to direct towards renewable or low-carbon sources. This additional demand in turn requires more copper for cabling, more aluminium for structures, more nickel and cobalt for storage, and more uranium for baseload power generation.

The orders of magnitude are significant. By 2035, copper demand is expected to rise by around 29%, aluminium by 23% and uranium by 29%, while lithium demand could increase more than fourfold. In China, the world’s leading industrial market, copper and aluminium consumption linked to clean technologies is expected to exceed demand from the traditional construction sector as early as this year, marking a structural shift in the drivers of consumption.

Rearmament as a structural demand factor

Added to this civilian dynamic is a strengthening of demand linked to military needs. Modern defence systems are highly metals intensive, requiring copper for electronics, tungsten for munitions, nickel for aerospace applications and rare earths for the permanent magnets that equip advanced guidance systems. The economic asymmetry of contemporary conflicts (expensive interceptor missiles set against low-cost drones) also weighs on inventories and intensifies pressure on supply chains.

Recent conflicts in the Middle East have confirmed this trend. The multi-year rearmament programmes launched across most of the major Western economies, as well as in Japan, South Korea and India, extend this underlying trend. Security of supply for critical metals is now addressed, in a number of strategic doctrines, on the same footing as energy security was in past decades.

Structurally constrained supply

In the face of this demand, the mining sector’s productive capacity is running up against increasingly tangible limits. Project development timelines have lengthened: a new copper deposit now requires nearly eighteen years to reach production, compared with around twelve years in the mid-2000s. Ore grades are declining across most legacy deposits. Permitting processes have become more cumbersome. Environmental and social constraints have tightened. The cost of capital required to launch new projects, in a context of durably higher long-term rates, represents a further headwind.

The logical consequence is that supply deficits are expected to emerge by 2030-2035 for several strategic metals, notably copper, cobalt, uranium and lithium. These imbalances should provide durable support for prices and create an environment favourable to producers with quality assets, capital allocation discipline and exposure to the most constrained metals.


III. THE GEOPOLITICS OF SUPPLY CHAINS

Geographic concentration and asymmetry of dependencies

One of the most striking features of the current landscape lies in the extreme geographic concentration of critical metals supply chains. Both mining operations and refining and processing capacity are concentrated in a small number of jurisdictions, often outside the OECD, which creates asymmetric dependencies for Western economies.

China occupies a dominant position across the entire value chain. It accounts for a majority share of global rare earths refining, controls a substantial fraction of lithium, graphite and tungsten processing, and plays a central role in the processing of copper, nickel and aluminium. This dominance stems not only from geological advantages, but from a strategic effort spread over several decades, combining industrial investment, energy policy and vertical integration.

Other actors hold critical positions in specific segments. Indonesia now dominates the nickel sector, with a majority share of global production and rapidly growing processing capacity. The Democratic Republic of the Congo accounts for a decisive share of cobalt supply. Australia remains a key supplier of lithium and bauxite. Kazakhstan, Canada and Niger play a central role in the uranium cycle. This distribution creates a map of dependencies that does not necessarily align with traditional diplomatic alliances.

Vulnerability of trade routes

Added to this concentration of production is the fragility of the maritime routes through which these flows transit. The strategic chokepoints (Hormuz, Malacca, Bab el-Mandeb, Suez) constitute critical passage points whose disruption can significantly affect supply. The conflict in the Middle East has been a reminder that the risks weighing on these logistical corridors are not theoretical: they translate into higher marine insurance costs, longer delivery times and, in some cases, production stoppages.

The example of aluminium is instructive. The Persian Gulf concentrates around 9% of global primary production capacity, the bulk of which transits through the Strait of Hormuz. Any prolonged disruption of this route can place several million tonnes of production at risk, with immediate consequences for international prices and the stability of downstream supply chains.

Export controls as a strategic weapon

The trade policy toolkit has also evolved. Export controls, once marginal in the mining sector, have become a central instrument. China has made increasing use of them in recent years, successively restricting exports of gallium, germanium, antimony and graphite, followed by processing equipment. Signals indicate that restrictions could extend to rare earth refining technologies themselves, which would constitute a major qualitative step change in the instrumentalisation of critical chains.

These decisions are in keeping with historical precedent. Chinese restrictions on rare earths over the past decade had already disrupted global markets and led several economies (notably the United States, Japan and Australia) to engage in diversification strategies. The repetition of such episodes, against a backdrop of intensifying technological rivalry, reinforces awareness of the structural vulnerability of Western economies.


IV. THE RETURN OF THE STRATEGIC STATE

The United States: from a financing approach to direct equity participation

Faced with these dependencies, Western economies are redeploying their industrial policy toolkit with an intensity unseen for several decades. The United States has led the way. The Inflation Reduction Act of 2022 laid the first foundations of massive support for strategic value chains, combining production tax credits, domestic content requirements and reshoring incentives. While certain provisions have been adjusted following later political changes, the general architecture of the framework has remained foundational.

The next step was taken with the One Big Beautiful Bill Act, which for the first time establishes a budgetary envelope explicitly dedicated to the extraction, refining and processing of critical minerals. The framework provides for up to USD 5 billion of direct investment, USD 500 million in credit subsidies capable of mobilising up to USD 100 billion in loan guarantees, and USD 3.3 billion for long-term offtake contracts. Added to this is Project Vault, which aims to establish a USD 12 billion strategic national reserve covering rare earths, lithium and nickel.

Beyond the new legislation, existing frameworks have been repurposed. The Defense Production Act, the Export-Import Bank, the Development Finance Corporation and even certain components of the CHIPS Act are now mobilised to support mining projects, both at home and abroad. Cumulative commitments by the current US administration are estimated at approximately USD 18.6 billion, spread across around sixty projects.

The most notable change lies in the nature of these interventions. Washington is no longer merely lending or subsidising: the US government now takes direct equity stakes in certain mining companies. Lithium Americas’ Thacker Pass project, initially supported by a Department of Energy loan, has evolved into a direct equity participation, alongside a joint venture with General Motors. MP Materials, operator of the only active rare earths mine in the United States, has been the subject of a USD 550 million strategic investment by the Department of Defense. This shift from a financing approach to direct equity participation marks a historic break with the non-interventionist doctrine that had previously prevailed.

A broader Western mobilisation

This movement extends well beyond the American context. The Pax Silica initiative, conducted under United States leadership, aims to structure a Western supply chain for critical metals linked to artificial intelligence, valued at USD 1 trillion. The Critical Minerals Partnership signed between the United States and Australia in 2025 mobilises USD 8.5 billion in project financing, in direct response to Chinese pre-eminence.

The European Union is advancing along complementary lines, structured around the Critical Raw Materials Act and the RESourceEU initiative, whose ambition is to create a European centre for monitoring, joint procurement and stockpiling of critical raw materials. France, Germany and Italy are driving enhanced coordination. The United Kingdom is exploring strategic stockpiling arrangements via NATO and dedicated national frameworks.

In Asia, Japan and South Korea already have reserve systems managed by public authorities and continue to expand their network of international partnerships. India has launched its National Critical Mineral Mission, while bilateral agreements between Japan and Australia complete the framework.

A new political economy of resources

Taken together, these developments point to a paradigm shift. For several decades, the dominant doctrine rested on the efficiency of global markets, international specialisation and cost optimisation. The pendulum has shifted: resilience, security of supply and control of the strategic nodes of the value chain now take precedence over pure optimisation. The implications for markets are substantial, since this new political economy introduces a durable geopolitical risk premium into price formation, and structural support for the valuation of strategically positioned assets.


V. PRIVATE WEALTH PERSPECTIVE

The return of real assets to allocations

For the wealth investor, the context described calls for reflection that goes beyond the usual cyclical reading. Several forces are converging to place real assets back at the centre of long-term strategic allocations.

The first is the inflationary backdrop. The US M2 money supply has expanded by around 48% since the beginning of 2020, meaning that approximately one third of the dollars currently in circulation have been created over a very short period. Added to this monetary expansion are the inflationary effects of tariff policies, supply chain tensions and the energy crises linked to recent conflicts. In such an environment, assets whose supply is by nature constrained (precious metals, critical industrial metals, land resources) retain a notable relative advantage over purely financial assets.

The second concerns sovereign debt levels. The public debt-to-GDP ratio in the United States is approaching 122%, compared with 32% at the end of the 1970s. Federal debt servicing costs now exceed USD 1 trillion per year, around 19% of federal revenues, and exceed the defence budget. This configuration creates a structural constraint on the room for manoeuvre of central banks and increases the likelihood of prolonged fiscal dominance, in which monetary policy remains accommodative to support fiscal sustainability, even if this means tolerating inflation above target.

The third force is the slow erosion of the unipolar currency system. De-dollarisation is progressing at a moderate but cumulative pace, driven by the diversification of central bank foreign exchange reserves, the multiplication of local currency settlement agreements and the coordinated efforts of certain emerging economies to reduce their dependence on the dollar. Gold, in this context, has regained its role as a reserve asset, as reflected in the sustained net purchases by central banks over recent years. Convergent signals further suggest that silver could gradually benefit from a similar logic, fed by both industrial demand and strategic stockpiling behaviour.

Gold and silver: the return of monetary assets

In this context, gold and silver occupy a distinctive position that warrants separate treatment. Gold is no longer merely an occasional safe-haven asset or an inflation hedge: it is gradually reclaiming its role as a reserve asset, as reflected in the convergent behaviour of numerous central banks over several years. Cumulative net purchases now significantly exceed levels observed in previous decades, and reflect an active search for alternatives to the concentration of reserves in sovereign bonds denominated in reference currencies. This movement, structural rather than cyclical, profoundly alters the supply-demand dynamics of the gold market, where mining production is rising slowly while official purchases continue to rise.

Silver presents a distinct but complementary profile. Added to the historical monetary heritage it shares with gold is a considerable industrial dimension, driven by demand from photovoltaics, power electronics and electrical and electronic applications. This dual nature, monetary and industrial, places it at the intersection of the two major themes developed in this document: the re-rating of real assets in the face of monetary expansion, and the growing demand pressure on strategic metals supply chains. Several indicators suggest that a gradual rebuilding of strategic stockpiles, combined with a structural supply deficit, is creating a tight environment that may prove durable.

For the wealth investor, gold and silver thus play complementary roles: gold as a long-term monetary anchor within a wealth-preservation framework, silver as an asset more exposed to both monetary dynamics and electrification themes. Both fit within the same fundamental logic, that of assets whose supply remains structurally inelastic in the short and medium term.

Relative valuation that remains attractive

Beyond macroeconomic arguments, the question of valuation deserves attention. The listed mining sector currently represents only around 0.4% of global market capitalisation, a historically low ratio that reflects a long period of institutional investor disaffection. This structural underrepresentation contrasts with the sector’s new strategic centrality.

Valuation multiples reflect this anomaly. Diversified mining companies trade at EV/EBITDA multiples generally between 6 and 8 times, compared with multiples of 13 to 22 times for the major market sectors (technology, healthcare, consumer goods). This gap is all the more notable given that the operating margins of top-tier producers have improved markedly, on the back of capital allocation discipline, rigorous cost management and a more favourable price environment.

Free cash flow generation has also strengthened, creating the conditions for a shareholder return policy supported by dividends and share buybacks. The expected trajectory of free cash flow generation over the coming years, against a backdrop of sustained prices and controlled investment, constitutes a fundamental support for the sector’s performance.

Production costs and the need for a selective approach

Exposure to the mining sector also requires close attention to cost structures. Producers remain sensitive to changes in energy prices, certain chemical inputs and logistics. As an indication, a USD 10 increase in the oil price may translate into a meaningful rise in operating costs, both for gold producers and for copper producers.

This reality reinforces the importance of a selective approach, attentive to asset quality, jurisdiction of operation, cost structure and operator financial strength. Producers with vertical integration, geographic diversification and access to competitive energy sources retain a marked relative advantage in this environment.

An undervalued strategic asymmetry

Beyond valuation and fundamentals, the sector offers an asymmetric profile that few other asset classes provide. In a scenario of heightened geopolitical tensions, trade fragmentation, persistent inflation or a confidence crisis affecting certain currencies, mining assets (and more broadly real assets) display hedging properties that are difficult to replicate through traditional equity markets. This asymmetry, still largely absent from conventional institutional allocations, in our view constitutes one of the strongest arguments for a measured and active exposure to the sector within a balanced private wealth allocation.


VI. APIS PERSPECTIVE

At APIS Asset Management, we consider that the analysis of strategic metals today goes beyond a strictly sectoral framework: it forms part of a broader reflection on industrial sovereignty, energy security and the re-rating of real assets within private wealth allocations. Several of our investment strategies naturally align with this perspective.

Our reading of the current cycle rests on a conviction: the dynamic under way does not stem from a passing cyclical rebound, but from a structural re-rating of strategic commodities within the global economic and financial architecture. This conviction leads us to favour a selective approach, founded on the quality of underlying assets, the capital allocation discipline of operators, exposure to the most structurally constrained metals, and particular attention to dimensions of governance, jurisdiction and operational resilience.

Within our strategies dedicated to real assets, this reading has recently translated into a gradual repositioning towards strategic industrial metals and energy assets. Copper producers with top-tier assets, established players in the uranium sector supported by renewed interest in civil nuclear power, and selective exposures to the conventional energy sector appear to us today to offer relevant anchor points within a logic of positive sensitivity to inflationary environments and of exposure to a long-term industrial investment cycle. This adjustment, implemented over the past few months, reflects our conviction that the scarcity premium now tends to shift from precious metals alone towards the full range of resources critical to the value chains of the energy and industrial transition.

Within an overall private wealth allocation, we believe that a measured exposure to critical resources, directly or via listed mining equities, may play several complementary roles: a hedge against structural inflation, diversification against de-dollarisation risks, participation in a long-term industrial investment cycle, and contribution to the re-rating of assets still under-represented in institutional portfolios. This exposure is intended neither to substitute for the traditional pillars of an allocation (high-quality sovereign bonds, diversified listed equities, real estate), nor to dominate the portfolio, but to complement these blocks by adding a dimension of strategically positioned real assets.

The current environment appears to us to warrant renewed attention from wealth investors with a sufficient investment horizon and a tolerance for the sector’s inherent volatility. Analytical discipline, selectivity and in-depth knowledge of sectoral dynamics remain, in our view, the principal determinants of performance in this universe.


VII. CONCLUSION

The return of metals to the centre of the global economy is not a passing phenomenon. It reflects a profound recomposition of strategic hierarchies, in which security of supply, industrial autonomy and mastery of the critical nodes of the value chain now take precedence over considerations of efficiency alone. This paradigm shift comes hand in hand with a macroeconomic environment that provides durable support for real assets, in a world marked by sovereign indebtedness, structural inflation and monetary fragmentation.

For the wealth investor, the conjunction of these dynamics creates a singular framework. The critical resources sector remains under-owned, relatively undervalued, and exposed to structural forces that should play out over several cycles. Selectivity, analytical rigour and patience will be the key factors in benefiting from it.

More broadly, the integration of real assets into sophisticated private wealth allocations has become an essential consideration. In a world where the certainties of the previous economic order have eroded, where inflation has ceased to be a passing anomaly and where geopolitics is now part of price formation, diversification towards strategic resources continues a long tradition: the preservation of real capital across successive generations.


VIII. DISCLAIMER

This document has been prepared by APIS Asset Management for information purposes only. It does not constitute an offer to subscribe, a solicitation to invest, or investment advice, and shall not be construed as such. The analyses, opinions and estimates it contains reflect the judgement of their authors as at the date of publication and are subject to change without notice. Past performance is not indicative of future performance. Investments in precious metals and related financial instruments involve risks, including market, volatility, liquidity and capital loss risks. This document does not take into account the particular financial situation, investment objectives or specific needs of any recipient. It is the reader’s responsibility to conduct their own analysis and, where appropriate, to consult their professional advisers before any investment decision. Reproduction or distribution of this document, in whole or in part, is prohibited without the prior authorisation of APIS Asset Management.


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