Sovereignty, growth and innovation: the vital importance of strategic and critical materials
Copper, nickel, uranium, rare earths and platinum are the indispensable bedrock of the energy transition, artificial intelligence and advanced defence systems. Behind the defining technological shifts of our century lies a frequently overlooked reality – a growing dependence on materials that have become both critical and strategic. Today, sovereignty is contested in the Earth’s subsurface, with access to specific minerals now a prerequisite for economic, technological and military pre-eminence. We believe this pivotal theme creates compelling long-term opportunities across the entire economy.
Defining strategic and critical
The critical or strategic status of a material is not necessarily a function of geological scarcity. Rather, it is defined by its essential contribution to economic stability and the vulnerability of its supply chain – whether due to fragility, geographical concentration or political exposure. Recent years have offered stark illustrations of this vulnerability. In 2023 and 2024, an unprecedented drought in Panama lowered water levels in the Canal, significantly curtailing maritime traffic and causing sustained delays in global shipments of copper, silver and bauxite. A single, localised weather event was sufficient to disrupt global supply chains vital to infrastructure and industry. When compounded by geopolitical tensions and concentrated production for certain materials, these factors exert upward pressure on prices. Rare earths are a case in point: the price of neodymium – essential for the permanent magnets used in electric motors, hard drives and wind turbines – rose by 55% in 2025, driven by highly concentrated production and surging demand.
A new approach to investing in sovereignty
With the bulk of these value chains – extraction, refining and manufacturing – concentrated in China, the issue of sovereignty has moved to the fore. The critical nature of these materials is now a matter of economic and strategic dependence, a reality underscored by recent challenges in the global defence landscape. Combat aircraft, submarines and secure communication systems require several tonnes of critical metals and rare earths; without secure access, military autonomy is compromised. For governments, this is no longer merely an industrial concern, but a pillar of national security. Consequently, the United States is pursuing assertive strategies to onshore capabilities, secure resource access and rebuild entire value chains from mine to defence contractor. Apple’s investment in MP Materials – the only active rare earth mine on American soil – illustrates this drive to secure strategic resources. Similarly, in France, Solvay’s recent opening of a neodymium and praseodymium production line in La Rochelle, sourced from recycled permanent magnets, demonstrates how the circular economy can bolster supply security.
Structurally constrained supply
As strategic demand gathers pace, the primary challenge for investors lies in navigating a structurally constrained supply side. Mining operations are becoming increasingly complex; developing a new site typically requires 10 to 15 years, massive investment and a rare degree of political and regulatory stability. Added to this is the legitimate need to take environmental constraints into account. In such an environment, even minor supply disruptions can trigger prolonged market tension. Meanwhile, the material intensity of AI, defence, the energy transition, electrification and critical infrastructure continues to rise. Even in the absence of a surge in demand, the cumulative weight of these strategic requirements places enduring pressure on already stretched supply chains.
Selectivity and stock picking
As equity investors, our objective is not to speculate on commodity prices, but to identify the entities that control supply and the players capable of delivering long-term resilience. We do not invest in raw materials themselves, but in the companies that extract, process or secure their availability.
These industry leaders can create value even during periods of price stability thanks to the quality of their assets, their financial discipline and their strategic positioning. Given that the critical materials universe is both diverse and cyclical – and fraught with operational risks – active management is essential. Unlike passive, index-tracking approaches, which can dilute risk and obscure the underlying issues of sovereignty, active management seeks to identify key players with strategic assets, operational visibility and a central role in value chains. In this context, stock picking is not an option; it is a necessity.
Indispensable to economic competitiveness, the energy transition and national security, critical and strategic materials offer significant growth potential. For long-term investors, this burgeoning theme offers a powerful source of diversification and opportunity.