Water: The Ultimate Scarcity Resource | Australian Markets
Earlier within the month, I detailed China’s Mega Dam project, which is set to turn out to be the world’s largest hydropower project. But I didn’t cowl the potential battle that is set to create.
Michael Burry is legendary for calling time on the subprime lending market years earlier than anyone else.
His story was portrayed within the movie The Big Short. Even in case you have seen it, it’s price watching again.
I keep in mind the final time I watched it, and by the tip, I needed to promote each stock I owned!
Getting a bit of market worry back into the nerves could possibly be a good antidote to all of the overwhelming bullish sentiment in world markets proper now!
Anyway, the ultimate credit of the movie infamously end with the quote:
“The Western world is slowly drinking itself dry.”
Michael Burry believed that water could be essentially the most essential investment theme within the years to return, specializing in water-rich farmland.
Fresh, clean water is a crucial commodity for human and agricultural use, manufacturing, and mining processing.
In truth, one of the massive issues about copper provide stems from the shortage of water accessible to course of it at main copper operations.
Processing copper ore is water-intensive, and a lot of mining exists in locations that don’t have a lot water.
Like Chile’s Atacama Desert, a place with the world’s largest copper mines, however one of the driest locations on Earth!
But regardless of the fears, water hasn’t actually delivered any main menace to world economies up to now.
But that might change quickly…
Revisiting China’s Mega Dam
As you would possibly keep in mind, I just lately detailed a main infrastructure project—a mega-dam — underway within the Tibetan area of China.
Once accomplished, this project will surpass the Three Gorges Dam because the world’s largest hydropower operation.
As I defined, that project helped kick-start China’s mighty infrastructure growth of the early 2000s.
The area’s Premier Li Qiang has described this new mega dam in China’s West because the “project of the century.”
But what I didn’t deal with in that piece was the project’s LOCATION.
China plans to dam the mighty Yarlung Tsangpo River.
It will accomplish that alongside a part that drops a mammoth 2,000 metres over 50km creating immense hydropower potential.
But it sits on the doorstep of one other superpower
As you possibly can see on the map under, this mighty dam sits instantly upstream from China’s neighbours… India and Bangladesh.
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Source: Nikkei Asia |
The Yarlung Tsangpo flows south into India, turning into the Brahmaputra River, then into Bangladesh.
But it additionally flows by way of a area often known as Arunachal Pradesh – a territory claimed by each China and India.
China’s downstream neighbours are involved about a potential water battle. And for good purpose.
Millions rely upon the river for farming, ingesting water, and fishing.
New Delhi views the development as a energy play by Beijing, extracting huge financial benefits.
It additionally fears that China might weaponise its upstream benefit, utilizing the dam to both flood or induce drought over its downstream neighbour.
It’s why India’s Chief Minister just lately described the project as a ticking “water bomb”.
Given the worldwide geopolitical backdrop, there’s a lot to think about right here, but few are taking discover.
Two main economies with a historical past of battle vying for a crucial useful resource that flows by way of disputed territory.
Water might quickly sit on the coronary heart of main geopolitical turmoil and that might have investment implications: that is the final word shortage commodity.
Opportunities for traders on this enviornment aren’t simple to search out, however they do exist.
That’s what I’ll be revealing quickly for my paid readership group at, Diggers & Drillers.
Until subsequent time.
Regards,
James Cooper,
Mining: Phase One and Diggers and Drillers
All advice is common advice and has not taken into consideration your personal circumstances.
Please search unbiased financial advice relating to your own scenario, or if unsure concerning the suitability of an investment.
James Cooper has been a working geologist in mines throughout Australia, Canada, and Africa for the reason that early 2000s. He’s led the operations of tiny explorers by way of to large producer outfits. He’s seen booms and busts firsthand and he additionally understands the cyclical nature of particular person commodities. For instance, James was proper there when Barrick Gold launched an huge $7.5 billion takeover bid for Equinox. That was the height of the final cycle.
With his background as a geo and finance skilled, he brings a distinctive insight and expertise to Fat Tail Investment Research. He writes the broader resource-focused investing letter Diggers and Drillers and the ultra-speculative explorer-focused trading service Mining: Phase One.
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