[Source/Observer Network Zhang Jingjuan] According to a Bloomberg report on April 1st, Oskar Lewnowski, the founder of global major metals and mining financial services provider Orion Resource Partners, urged countries to stockpile metals and warned that a lack of investment would lead to supply shortages comparable to the oil crisis of the 1970s. He also mentioned that some governments had contacted him to inquire how they could catch up in areas where China has been deeply entrenched for a decade.
Lewnowski said that the lack of sufficient mining investments means the world is accelerating towards a metal supply crisis, comparable in severity to the oil crisis of the 1970s. He believed that one solution is for the state to establish strategic mineral reserves.
"This is a very important issue, and governments certainly need to be more involved," Lewnowski said in an interview.
The report pointed out that Lewnowski's remarks reflect the "paradox" facing the mining industry: as concerns over the supply of critical minerals for sectors ranging from electricity and communication infrastructure to defense increase in Europe and America, mining has suddenly become a strategically prioritized industry. However, with China's investment projects releasing capacity, prices of key metals such as nickel and lithium have fallen, making it consistently difficult to build new mines and secure financing for them.
Lewnowski is not the only one calling for government intervention. Last week, Richard Holtum, CEO of Trafigura, a Singapore-based multinational commodities trading giant, stated that the mineral processing industry should rise to the level of a "national security issue," requiring strong support from the government. He claimed that Western governments should "nationalize" part of the metal processing facilities to compete with China; otherwise, the West will never be able to reduce its dependence on China's critical mineral supplies.
It is worth noting that Holtum made these remarks while Trafigura was conducting a strategic review of its underperforming and loss-making Australian Nyrstar zinc and lead smelting assets for potential sale, hoping that the Australian government would "take over."
Oskar Lewnowski, Bloomberg
The report noted that understanding Orion Resource Partners' recent investment setbacks helps explain why Lewnowski is urging governments around the world to get involved.
In 2021, the private equity company joined Glencore, a global mining giant and competitor of Trafigura, as well as Egyptian billionaire Naguib Sawiris to support Horizonte Minerals Plc's nickel project in Brazil.
At the time, thanks to the surge in demand for electric vehicle batteries, the outlook for nickel prices was optimistic, and car executives were concerned about future nickel shortages. However, the nickel project of this London-listed company may never be completed. A previous assessment showed that the project costs skyrocketed, far exceeding expectations, and entered bankruptcy management. Lewnowski's company faced massive losses on its approximately $150 million investment.
This is a vivid case showing that high demand does not necessarily bring quality investments. When Horizonte Minerals revealed that its construction costs would nearly double the forecast, investors lost confidence. Meanwhile, China's investments in Indonesia boosted nickel ore production. Lewnowski said this put pressure on competitors.
Morowali Industrial Park, home to Indonesia's largest nickel processing park, located in the eastern part of Sulawesi Island. Bloomberg
The report noted that China dominates the metal processing sector, accounting for more than half of global copper, zinc, and aluminum processing volumes, and an even higher share in niche metals like cobalt, lithium, and rare earths. Meanwhile, European banks, traditionally funding mining projects, have gradually exited the industry, and public equity investors have developed an aversion to mining companies, highlighting the importance of private capital. This has prompted some governments seeking to counter China's dominance to reach out to Lewnowski.
"They ask basic questions like 'How serious is this problem?' and 'How can we catch up in areas where China has been entrenched for a decade?'" Lewnowski said.
Lewnowski, a former investment banker, left the legendary commodity hedge fund Red Kite in London over a decade ago to start his own business. His company, Orion Resource Partners, has now become the world's largest specialized investment institution in metals and mining, focusing on private equity and private credit. The company currently manages approximately $8 billion in funds. Earlier this year, the company announced a joint venture with ADQ, an Abu Dhabi sovereign wealth fund, to invest in mining companies. According to ADQ, they plan to invest $1.2 billion in the metals and mining sector over the next four years.
The report pointed out that in recent years, the idea of storing critical metals has gained increasing attention in some places. "This won't happen overnight, but it's something governments need to do," Lewnowski said.
Holtum claimed last week that Western countries face the risk of outsourcing their smelting industries to China.
He said during the announcement of the strategic review of Trafigura's underperforming Australian Nyrstar zinc and lead smelting assets: "In today's fragmented multipolar world, I believe that assets like Nyrstar, which lack competitiveness, should not be entirely in private hands. Critical infrastructure and smelting capabilities are issues of national security, so some form of government ownership or significant government support may be needed. Compared to Chinese smelters, it (Nyrstar and similar sites) has no international competitiveness."
Richard Holtum, Bloomberg
The report noted that Lewnowski believes the entire mining industry has disappointed investors.
However, he pointed out that according to the International Energy Agency's predictions, by 2040, the world will need to spend over $300 billion building copper mines to ensure enough metal supply to meet all the cables and wires required for the transition away from fossil fuels.
He said it remains unclear where this money will come from, and copper prices need to rise from the current $9,700 per ton to $13,000 to $14,000 per ton to incentivize sufficient investment. Bloomberg noted that investing in mining requires optimism along with a sense of dark humor. Just as Lewnowski predicted copper prices would break through unprecedented levels at $13,000 per ton, he then used Mike Tyson's famous quote to summarize his career: "Everyone has a plan until they get punched in the face."
In addition, Lewnowski also believes that tin, uranium, lithium, and cobalt will also face "challenges" in the future.
"You need this price to incentivize certain types of new production. But before the price is determined, you cannot base investments on assumptions," Lewnowski said.
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