Asad Farid of J. Safra Sarasin names three stocks tied to electrification, precious metals and the space economy.
Our fund, JSS Sustainable Equity Strategic Materials, covers the full strategic-materials value chain. Mining companies account for roughly 70% to 80% of the portfolio, with the balance invested in recycling, mining equipment, battery production, and advanced materials. These companies benefit from the same long-term trends, while their earnings tend to fluctuate less than miners' do.
Each month, I assess commodities against five measures: marginal production costs, inventories, the economic cycle, supply and demand, and trade barriers. That process helps us find opportunities when prices are depressed. Mining stocks are ranked separately, based on operating cash costs, execution history, jurisdictional risk, balance-sheet strength and valuation. We also build detailed valuations for individual mines, then test how those estimates hold up under stress.
The fund falls under Article 8 of the EU's SFDR rules, promoting environmental or social characteristics - an uncommon classification in mining. We see sustainability and returns as closely connected: strained relations with communities, regulators, or governments can delay a mine, raise costs, or even cost the company its licence to operate. Strong environmental and social standards help protect returns. These are three stocks we like.
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Three strategic materials stocks for your portfolio
Acerinox (Madrid: ACX) is a Spanish producer of stainless steel and speciality alloys. Its Haynes International business makes high-performance alloys that can endure extreme heat and pressure. Aircraft engines and industrial gas turbines rely heavily on these specialised materials, which also support aerospace hardware such as rocket nozzles and pumps used aboard space vehicles.
Wheaton (LSE: WPM) is not a conventional mining company. It advances money to miners and, in return, receives the right to buy part of their future gold and silver output at prices agreed in advance. That arrangement is the main appeal: because Wheaton does not run mines, it has far less exposure to higher labor and energy costs, expensive equipment, or the operating setbacks that can hurt traditional producers. In my view, this creates a different and lower-risk way to gain exposure to precious metals. The company also has a strong pipeline of potential growth.
Large copper mines often produce gold and silver as well. That gives companies such as Wheaton a way to finance development through streaming agreements while gaining exposure to new mines without the operating risks and responsibilities of ownership.
Freeport-McMoRan (NYSE: FCX) ranks among the world's largest copper producers, giving investors exposure to a metal that I believe will matter greatly over the next decade. Copper underpins electrification, power-grid expansion, data centres and heavy industry. Demand should keep climbing, yet new supply takes years to develop, leaving a gap that may support higher prices. US trade policy could also become more favourable to domestic producers. In Indonesia, Freeport's massive Grasberg mine is recovering after a disruption last year reduced output. As production returns, the mine gives the company room to grow, while its copper business comes with significant gold exposure too.
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