The evolution of energy resources has seen a significant shift over the years. Initially, Britain harnessed coal, leading to the Industrial Revolution. Subsequently, the United States discovered oil, establishing it as a universal fuel. The oil industry then expanded further with the development of natural gas as a major business. However, many experts agree that the growth rate of the oil and gas market has reached its peak. As demand for traditional fossil fuels declines, the search is on for new energy resources.
One potential contender is lithium, essential for battery production in an increasingly electrified world. Substantial lithium deposits have been located primarily in friendly nations, with Australia accounting for half of the global supply. Additionally, lithium is abundant in seawater, indicating that supply issues are unlikely. However, the processing of lithium is predominantly controlled by China, which holds about 80% of the market share. This situation may present a manufacturing challenge rather than a straightforward resource opportunity.
Another emerging resource play is white hydrogen. This form of hydrogen, associated with helium, has the potential to be extracted from underground reservoirs. The first hydrogen well was drilled in Nebraska in 2023, but the results remain undisclosed. More drilling is anticipated in early 2024, both in Nebraska and Australia, making it too early to determine the viability of this resource.
Meanwhile, copper stands out as the best electrical conductor and is critical for the ongoing electrification of the economy. Analysts warn that current mining capacities may fall short of future demand, especially as the process of developing new copper deposits can take years and often requires significant infrastructure investments. Many prospective copper mines are not located near essential transport links, making them less accessible and thus a longer-term investment.
Uranium is also gaining attention, especially with the rising interest in nuclear power among technology advocates. The largest uranium deposits are located in Australia, followed by Kazakhstan, Canada, Russia, Namibia, and several countries with varying levels of political stability from a U.S. perspective. Should the nuclear industry experience a revival, significant opportunities could arise in uranium mining.
While these mining ventures offer potential rewards, they also carry substantial risks. The development of such resources involves considerable capital investment and time, and they are susceptible to price fluctuations and technological changes. These risks may exceed those associated with investments in oil and gas, though they could also yield greater rewards.
However, one resource presents a seemingly certain investment opportunity: water. The demand for clean drinking water is rising, while supply remains relatively fixed. Over a quarter of the global population lacks access to safe drinking water, and aging infrastructure contributes to significant leaks and pollution, further diminishing accessible water supplies. In the United States, recent Supreme Court rulings have weakened protections for wetlands, while reservoir levels have hit historical lows. The privatized water utilities in the UK face criticism for discharging sewage into rivers while simultaneously raising rates. Meanwhile, parts of the Amazon rainforest in Brazil have experienced severe drying.
Investing in water extends beyond drilling wells. It encompasses the development of technologies and services for water purification, desalination, and efficient distribution to minimize losses. Currently, the global water and wastewater industry represents only 15% of the oil and gas market size, resulting in less attention from investors. However, while the oil industry faces declining demand and ample supply, the water industry grapples with increasing demand amid static supply.
For investors, the question becomes clear: which scenario offers a more promising future? Despite skepticism about the viability of investing in water, it is worth examining the total returns—dividends and capital gains—achieved by water companies compared to those from oil companies. The data may prompt a reevaluation of investment strategies, leading to a shift towards water as the new oil.
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