You'll never hear Mickey Fulp talk about electric metals, technology metals or rare metals. But he's got plenty to say about specialty metals. While the nomenclature may not seem important, Fulp, who is one of the foremost experts in the space today, believes obscure definitions are confusing investors. In this interview with The Critical Metals Report, Fulp clears up the confusion and talks about some in-demand elements many investors may have never even heard of.
The Critical Metals Report: Mickey, your presentation at the recent Murdock Capital Partners Symposium, a primer on specialty metals for the layperson, was fascinating. What inspired the topic?
Mickey Fulp: There has been a lot of confusion in the minor metals space. There are a number of newly invented terms, such as electric metals, critical metals, rare metals, technology metals and strategic metals. If we go back through the demand history of what I prefer to call minor or specialty metals, these latter two terms have existed for a long time. By making the terms obscure and puzzling, we're doing a disservice to not only the lay investor, but also to professionals and analysts. My goal is to simplify this, go back to our roots and do away with superfluous names.
TCMR: The term that you prefer is "specialty" or "minor metals." But what metals actually fit the critical metals designation?
MF: In my opinion, the critical metals have a few crucial criteria: They are essential to modern-day industrial processes, and by extension, modern civilization and global economic health. They generally have major tonnages mined. They trade on open markets, including futures and options markets, or they trade as bulk, dried commodities via negotiated contracts or preset prices.
Critical metals would include iron ore, which comprises 95% of the world's total metal production and was a major advancement for humanity with the dawning of the Iron Age; aluminum, which had no application until the 1890s and now is the world's second most important metal; and copper, which is really the true electric metal, and whose price most directly affects global industrial and economic health.
I would also include the major ferrous alloys, such as chromium, manganese, nickel and molybdenum, which are essential metals for making various grades and types of steel; titanium, which in oxide form is used in nearly all pigments and in metallic form as ferrous and specialty metal alloys, and zinc, lead and tin, which are essential for major industrial applications, including galvanizing, batteries and alloys. Copper-tin alloys ushered in the Bronze Age, which was another major advancement for humankind. Finally, I consider uranium a critical metal. It had no known use, application or supply until the 1950s and now contributes 14% of the world's electrical energy supply.
TCMR: Uranium is less understood among the investment community. What's the source of the confusion?
MF: Uranium is different than the other critical metals in that it is not mined in large tonnages. About 50–55 thousand tons are produced per year, and it sells by the pound. It does not trade in a futures market of any significance, but through negotiated long-term contracts or via the spot price. As I mentioned earlier, the main criterion for a critical metal should be that it is essential to the function of modern-day industrial civilization. One out of every seven people in the world are using electricity that's sourced from a nuclear reactor, so in my book, uranium fits the bill.
A specialty or a minor metal is not essential to world economic health. In other words, if the supply were to dry up tomorrow, the world would find substitutes. Specialty metals are produced in small quantities, often as a byproduct in large mines. If their deposits exist as small mines, the concentrating, processing and refining costs are integral to their economic viability. They have sales and market opacity, meaning they do not trade on open markets but usually through offtake agreements or spot price negotiations. The metal is often controlled by a monopoly or an oligopoly – a cartel, if you will. This monopoly may be characterized by a single dominant company, country, region or singular deposit.
TCMR: Let's go over some specialty metals on your list. I notice you have lithium, beryllium, scandium and vanadium, among others. Where is the potential opportunity for investors in the space?
MF: I've come up with a list of 35 elements that I consider specialty metals. I tend to group 16 of those together as rare earth elements. Most investors will probably have heard of about half of these metals.
I apply additional criteria for the ones that I consider viable for speculation as flagship properties in the junior resource sector. I tend to like the elements that occur in small monometallic deposits that can be developed for relatively low capital expenditures (capex) because a junior has limited access to funds. These elements can be concentrated, processed and a final product sold into a free marketplace without incurring significant third-party risk. Therefore, I don't like metals that are controlled by monopolies or cartels or are byproducts from large smelters that are owned by giant mining companies. In my mind, the juniors can't compete in those spaces.
The Periodic Table: Critical Metals (Red) and Specialty Metals (Green)