While Gold And Oil Are All The Buzz In Times Of Inflation, This Commodity Has Surprising Ties To The World's Food Supply And Future EV Development

While commodities like oil, gold and utilities have been in the spotlight during a period of hyperinflation and global conflict, everyone is overlooking a vital commodity that is under serious strain and could potentially have devastating effects on the world’s food supply and EV battery market.

That commodity is phosphate. Phosphate is vital in the development of fertilizer, which is used in the processes of numerous industries including agriculture, fisheries, food preservation, cosmetics, detergents, and even plays a vital role in the development of electric vehicles (EVs) from companies like Tesla TSLA and Ford F, and for semiconductors. It is a crucial component in the process of numerous essential items people use and consume on a daily basis.

Phosphate has been under strain because of the tensions between China and Taiwan and the current Russia and Ukraine conflict. Together, China and Russia produce nearly 45% of global phosphate and recent sanctions on the two countries have prevented exports, potentially causing a shortage of fertilizer on a global scale. These sanctions could also put a squeeze on EV battery development, with the popularity of electric vehicles taking the spotlight in recent years for political, environmental, and consumer-driven reasons.

There is a light at the end of the tunnel, however. President Joe Biden recently signed into law the Inflation Reduction Act which is expected to open the door for further expansion of clean energy initiatives in not only the United States but Canada as well. 

All in all, the bill will put focus on tax credits for North American manufacturers of EVs and their components, of which will include the various minerals needed for the production of those components. As previously noted, this could be a huge opportunity for the production and mining of phosphate, with probable upward headwinds tied to the industry. As a result, Canadian companies are preparing to ramp up production and efficiency in the mining process of the vastly important chemical commodity by means of funds and tax credits included in the U.S. enacted bill. 

Introducing Arianne Phosphate

One of these said companies is Arianne Phosphate DRRSF, a Canadian company focused on mining and developing phosphate in specialty markets.

Led by President Brian Ostroff, Arianne has partnered with Corem, a Quebec-based company that specializes in mineral processing.

Arianne’s processes produce low minor element ratio (MER) and higher MER phosphate concentrate using high-intensity magnetic separation that maximizes the efficiency and time needed to produce phosphate.

The result is that Arianne reports that its phosphate concentrate can be made to meet target production goals quickly and efficiently. The low MER production in particular is beneficial for specialty phosphate applications, such as the acid used in lithium batteries, which is a critical element used in the production of EV batteries and charging components.

The high MER concentrate would contribute to the development of fertilizers because it contains higher levels of beneficial micronutrients like iron. Companies like Arianne are creating potential headwinds in the phosphate markets that haven’t been seen in over seven years, and quietly signal future positive guidance in the pipeline of agricultural and EV industries.

Common shares of Arianne Phosphate currently trade around 40 cents per share and are now up 5.43% year to date, including a one-month return of 12.79%. If you’re looking for an alternative investment to hedge inflation, looking to diversify or expand your exposure to alternative commodities, or simply looking for an entry point into EVs and their components, phosphate could be an under-the-radar sector to consider. 

For more information about Arianne Phosphate visit arianne-inc.com.

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Featured photo by Sung Wang on Unsplash