A Hidden Gem Promoting Uncooked Materials for the AI Growth


In at the moment’s Fats Tail Each day, Mining and tech won’t appear to be a probable partnership. However that is an rising phase of the market filled with distinctive alternatives.

James Cooper is off this week.

So we thought we’d share a snippet of a current report he despatched to members of he’s useful resource advisory service, Diggers & Drillers.

Get pleasure from!


On this month’s version of Diggers and Drillers, we’ll be seeking to take a slice of the booming AI market.

Mining and tech won’t appear to be a probable partnership. However that is an rising phase of the market filled with distinctive alternatives.

Simply take our mining service inventory, RPMGlobal Holdings [ASX:RUL].

The corporate has developed a set of software program packages tailor-made particularly for mining operators.

It’s enterprise mannequin is smart. The useful resource sector is bleeding money on this high-cost atmosphere and RUL’s AI backed expertise improves effectivity throughout operations, saving the miners money.

To date, the technique has labored out nicely.

RUL is up round 43% since we beneficial it final November. You’ll recall we took some earnings in February.

But, the corporate stands to learn over the long run too.

Given tech is ready to play a a lot bigger position in mining’s future, I’ve continued looking for extra alternatives on this area of interest area.

However this time, we’ll be specializing in the availability aspect…

Uncooked materials for the Semiconductor Business

As you recognize, curiosity in semiconductors has exploded in current months. That’s because of a growth in synthetic intelligence.

In the event you’re unfamiliar with the hyperlink, semiconductors have been likened to the ‘picks and shovels’ of the AI growth.

In different phrases, the very important instruments wanted to increase AI’s attain all through the worldwide financial system.

Little question, it is a sector providing large development alternatives.

For higher or worse, companies are quickly adopting AI into their office. That is an unstoppable pattern.

The AI revolution guarantees main disruption, particularly inside the white-collar sectors like regulation, accounting, and finance.

That would devastate the numerous professionals who might lose their jobs on this new AI period.

Nonetheless, it’s set to develop into a boon for main companies benefitting from larger productiveness.

From the graduate to the skilled practitioner, nobody’s immune from the specter of AI.

However as they are saying… ‘In the event you can’t beat them, be part of them!’

The useful resource sector might not appear to be an apparent selection to try this.

However recall the blowup in gallium and germanium provides final yr. Two minerals important for semiconductor manufacturing.

China holds a agency grip on world provide and used its dominance to hit again on Western stress.

Given the nation provides nearly 80% of the worldwide market, the announcement of China’s germanium and gallium restrictions final yr created a serious stir available in the market.

A small handful of Australian explorers surged on the again of those geopolitical rumblings.

And all it took was a sniff of germanium or gallium in some outdated drill core.

But, past a few tiny explorers, few ASX-listed gamers exist on this China-dominated market.

That’s why we’re not specializing in germanium or gallium this month.

I’ve uncovered one other important materials used within the manufacturing of semiconductors.

It’s often called Excessive Purity Alumina, or HPA for brief.

And this firm is ready to develop into one of many world’s largest suppliers.

So, strap your self in. This month’s alternative is seeking to ship one thing very distinctive.

However to really perceive the chance, we should first get an image of why HPA can be critically vital within the years to come back.

Excessive Purity Alumina: A Steel for the Future

Demand for HPA is various and pushed by two MAJOR development drivers: renewables and synthetic intelligence.

This month’s advice can be seeking to faucet into each these mega themes.

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That is actually a steel for the long run.

But so few perceive or know concerning the vital position of excessive purity alumina.

In keeping with Grand View Analysis, the worldwide HPA market was valued at round US$3.2 billion in 2022. However that’s anticipated to see a compound annual development price (CAGR) of round 22% from 2023 to 2030.

However what precisely is excessive purity alumina?

HPA is an ultra-refined type of aluminium oxide with a purity exceeding 99.99%!

You see, unrefined aluminium tends to carry small quantities of hint components like silica and iron. This provides it vastly totally different properties to HPA.

However as soon as these ‘impurities’ are eliminated, the magic of HPA begins to emerge.

Excessive transparency, chemical inertness, excessive thermal conductivity, and resistance to thermal shock…these are a few of the properties that make HPA very best for semiconductor manufacturing.

The fabric is used to construct the tiny wafers and insulating layers that encompass the chips.

But, this isn’t the one marketplace for this distinctive commodity.

It’s clear like glass however has far superior power. This implies it’s used for optical lenses, medical gear, and specialised home windows.

In reality, purified alumina is so robust it’s used as ‘clear armour’ for the army.

In the meantime, it’s good for making scratch-resistant digicam lenses and smartphone screens.

However the functions are broader, nonetheless.

HPA performs a important position in lithium-ion batteries.

Right here, it acts as one thing often called a ‘separator’.

A skinny, porous membrane that divides the optimistic and destructive electrodes (anodes and cathodes) in a battery cell.

Whereas separating the electrodes it additionally permits free movement of ions throughout charging and discharging battery cycles.

That is important for stopping brief circuits in EV batteries thereby eliminating the issue of spontaneous explosions which have plagued electrical automobiles.

But, the largest demand driver for prime purity alumina comes from the LED sector. In keeping with a report by Grand View Analysis, it accounts for 49% of general demand.

You may see the total breakdown, beneath:

Two issues to notice right here, ‘phosphor’ pertains to the sunshine emitting sector whereas ‘sapphire’ refers back to the specialised glass derived from HPA.

We’ll get into the ‘sapphire’ element in a second as this varieties an vital a part of our firm’s future downstream ambitions.

However a key factor to level out right here is that the panorama is shifting within the useful resource sector.

There are monumental alternatives amongst area of interest commodity markets, particularly these tied to minerals with distinctive properties and vast technological functions.

That’s an enormous change from the final commodity growth of the early 2000s.

Right here the main target was on bulk tonnage iron ore and base steel operations feeding a hungry Chinese language infrastructure growth.

However I consider buyers will should be way more focused with their funding decisions within the years forward.

The approaching useful resource growth will not be a tide that floats all boats, prefer it did over the last cycle.

Particular commodities will characteristic prominently, similar to lithium has over the previous few years.

And it’s these firms that may worth add and discover a area of interest available in the market that might profit essentially the most.

That’s what I’ve discovered for you this month.

A inventory already producing a small quantity of ultra-high purity alumina for specialised shoppers but destined to develop into one of many world’s largest HPA suppliers.

And that is an ASX-listed dwelling grown, downstream producer that’s ideally positioned to serve main tech companies and EV markets all through Asia and past.

So, let’s soar in and uncover this month’s rising success story!


To entry the total report plus all of James’ analysis and inventory suggestions, you are able to do so right here!


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James Cooper,
Editor, Mining: Part One and Diggers and Drillers

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