Getting the rocks right: Why metals matter more than ever

Robert Cohen leads the Metals & Mining Team at Scotia Global Asset Management and Dynamic, where he manages Gold, Mining and Resource mandates with a focus on high-quality assets, strong leadership and effective capital allocation. Click here to learn more about his investment solutions.

Key takeaways:

• Demand for critical metals is rising as needs for AI, electrification and defence reshape the global economy.
• Supply remains constrained by years of underinvestment and long timelines required to develop new mines.
• Mining companies offer exposure to scarce assets that can support diversification, inflation resilience and long-term growth.

Mining executive and Order of Canada recipient Pierre Lassonde famously observed that what cannot be grown must be mined. For investors navigating inflation, geopolitical uncertainty and market volatility, that simple insight has never been more relevant.

Gold's strong performance in recent years has certainly captured investors' attention, but the opportunity extends well beyond precious metals. Demand from electrification, energy security, artificial intelligence (AI) and national defence continues to grow, increasing the need for critical materials such as copper, lithium and tungsten.

The challenge is that supply is becoming increasingly difficult to deliver. Years of underinvestment, declining ore grades, permitting delays and geopolitical risks have constrained the industry's ability to respond to rising demand. New discoveries are harder to find, more expensive to develop and often take years to bring into production.

That combination of growing demand and limited supply is what makes the sector compelling today. Mining offers exposure to scarce assets at the centre of several long-term economic and technological shifts. The investment case extends well beyond a traditional commodity cycle and reflects structural forces that could support the sector for years to come.

Mining has traditionally been viewed as a cyclical sector tied to economic growth. While economic cycles still matter, today's investment case is increasingly being driven by forces that appear both durable and difficult to reverse.

Copper offers a useful illustration. Often referred to as "Dr. Copper" because of its connection to economic activity, the metal sits at the centre of several long-term growth trends.  From power infrastructure to data centres, the global economy increasingly depends on a reliable supply of copper.

Yet supplying enough copper may prove challenging. Years of underinvestment in exploration and development have reduced the industry's ability to respond quickly. Existing mines are increasingly producing lower-grade ore, while new discoveries are becoming deeper, more technically complex and more expensive to develop. Even after a viable deposit is identified, permitting, financing and construction can take more than a decade.

That creates an important dynamic for investors. Demand can increase relatively quickly, while supply often takes years to respond. When those forces diverge, periods of market tightness can persist longer than many investors expect, supporting commodity prices and creating opportunities for companies with high-quality assets. And as demand for critical metals continues to grow, the more pressing question is whether the industry can develop enough new supply quickly enough to meet it.

Geopolitics is adding another layer to the investment case for mining and strategic metals. Governments around the world are increasingly focused on securing access to the materials needed for defense, advanced manufacturing and essential infrastructure. As resource security becomes a strategic priority, some metals are taking on greater importance.

Antimony and tungsten are a case in point. Essential to a range of defence and advanced industrial applications, these metals are sourced largely from a handful of jurisdictions, many of them not considered “friendly” to the West. As governments work to secure critical supply chains, access to antimony and tungsten is becoming increasingly valuable, reinforcing the strategic importance of scarce resources.

That shift is changing how investors think about mining and metals. Many resources are no longer viewed simply as commodities. Instead, they are increasingly strategic assets whose value is tied to industrial policy, supply-chain resilience and long-term economic growth.

For investors, the portfolio implications are significant. Mining exposure may help investors navigate inflation, market volatility and geopolitical uncertainty while providing exposure to scarce assets that are becoming increasingly difficult to replace. Gold remains the most recognized example, with investors long viewing it as a store of value during periods of inflation and economic uncertainty. However, industrial and strategic metals also offer exposure to both structural growth and supply-driven scarcity.

Mining equities can add another dimension. Rising commodity prices can support stronger cash flows, improving profitability and asset values for well-positioned producers. At the same time, exposure to both precious and industrial metals provide access to a diversified set of return drivers.

“Harry Markowitz's work on the efficient frontier demonstrated that having gold in a portfolio of certain weightings enhances your return potential at a given level of risk,” says Cohen. “Mining and metals build on that foundation by providing exposure to real assets, inflation resilience and the critical resources supporting long-term economic growth."

The reality today is that the mining sector is no longer simply a cyclical investment tied to economic growth. Rising demand, constrained supply and growing geopolitical competition are transforming many metals into increasingly strategic assets.

For investors, the opportunity is about more than owning commodities. It is about gaining exposure to scarce resources that can support growth, help preserve purchasing power and contribute to portfolio diversification. As governments and industries compete for the materials needed to power the future, mining and metals may play an increasingly important role in long-term investment portfolios.