How Altius Minerals Is Building An ESG-Compliant Portfolio With The Potential To Deliver Sustainable Royalties For The Next 100 Years

As the United Nations wraps up its 78th General Assembly in New York City, the most pressing issue at hand has been putting the 17 Sustainable Development Goals (SDGs) back on track and aligning political agendas with the ever-important environmental goals. While governments will shape policy, companies have substantial sway in affecting the economy and direction of environmental action. ESG investing has been one of the fastest growing investment classes, even after public pressure around green-washing that occurred in 2022. This backlash has caused asset managers and regulators to be more cautious about what styles of investing get classified as ESG investments. This caution around using the term ESG more deliberately likely contributed to a report issued in 2022 by the US SIF, which classified $8.4 trillion in U.S. investment assets at the beginning of 2022 held by firms that factor ESG into their decision-making. Although this is a huge number, it’s less than half the $17.1 trillion assets that were classified as ESG assets under management in 2020. 

Altius Minerals ATUSF ALS has built an ESG-friendly royalty portfolio. Altius is part of the broader mining sector, an industry that has been under criticism for its long history of causing significant harm to the environment, from deforestation and habitat destruction to water pollution and greenhouse gas emissions. But materials that go into electronics, electricity generation, transportation and virtually all 21st-century lifestyle infrastructure are dependent on the mining industry. 

Altius is a royalty company that, unlike most of its competitors, has very little gold royalty exposure. Although gold has properties that make it uniquely adaptable for uses including medical and technology applications, its main demand source is jewellery and coins. Contrast that with copper, which along with potash, are Altius’s main exposures.  Altius is working towards creating a portfolio that is sustainable. The company is targeting potash, electrification battery metals and iron ore for green steel, along with their core holding in subsidiary Altius Renewable Royalties ATRWF ARR. These markets align with multiple UN sustainable development goals, such as eradicating poverty, ensuring renewable energy, responsible procurement and more. This strategic focus aligns with the values of stakeholders who believe in these goals.

One significant aspect of Altius Minerals' sustainable portfolio is the emphasis on long mine lives. Unlike typical gold mines that run for 10-15 years, potash mines, for instance, are expected to have a lifespan of up to 100 years or more. This longevity ensures employment opportunities for entire careers or even generations. Long resource lives are also the best predictors of expansion opportunities. While potash mine lives can be long at 100+ years, renewable energy resources are potentially infinite, making the business of ARR unique in that the resource is never subject to depletion. That is a significant contrast to other energy forms, like shale wells. 

Revenue from Altius Renewable Royalties is accelerating, with new project royalties expected to be operational by 2024 from investments already made. Their commitment to renewable energy aims to align with the global transition towards cleaner and more sustainable energy sources. 

Altius claims it doesn’t avoid industries where emissions are considered “hard to abate” like steel-making. Altius wants its investments to fall on the side of steel-making that is sourcing high-purity iron ore for electric arc furnace steel making, aiming to eliminate the use of metallurgical coal inputs. Altius’s iron ore exposure is Labrador Trough iron ore, considered to be among the highest grade and lowest impurity sources globally. 

One of the most significant ESG transitions in the world, along with the energy transition, is the transition from internal combustion engine transport to electric vehicles. According to the International Energy Agency (IEA), electric car markets have witnessed exponential growth, with sales exceeding 10 million in 2022; 14% of all new car sales in 2022 were electric, a notable increase from around 9% in 2021 and less than 5% in 2020. 

The IEA further projects that the global market value of electricity for EV charging is set to grow significantly, reaching approximately $190 billion by 2030. The Climate Action Tracker report suggests that to align with the 1.5 degrees Celsius pathway, fully electric vehicles will need to account for 75-95% of global annual passenger vehicle sales by 2030 and 100% by 2035. 

This growth demonstrates the increasing demand for EVs and the need for the materials and infrastructure to support this growth. As an example, an electric vehicle uses almost 2.5 times the copper of a car with an internal combustion engine, and S&P Global forecasts that copper demand will nearly double between 2022 to 50 million metric tons and 2035 to 50 million metric tons. By 2050, demand will reach more than 53 million metric tons. To illustrate just how strong the demand growth is, S&P Global noted that that’s “more than all the copper consumed in the world between 1900 and 2021.” EV demand is similarly driving the need for mining of other materials such as lithium, which is commonly used in EV batteries. Copper is one of Altius’s largest royalty exposures.

Mining producers of these critical materials will need financing partners who support the impact they’re making and their sustainability goals. Altius Minerals aims to position itself as a leading diversified royalty player with positive impacts on climate, electrification and food security, as well as a front-runner in the ESG space – an ideal financing partner for sustainable miners.

Featured photo by Matthew de Livera on Unsplash.

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