Investing in scarcity

The shift from just-in-time globalisation toward just-in-case resilience should favour businesses controlling scarce assets in metals, energy and computing infrastructure.

• Covid-19, Russia’s invasion of Ukraine, US-China trade tensions and instability in the Middle East have exposed supply-chain vulnerabilities, while the New York Fed’s Global Supply Chain Pressure Index recorded historically elevated stress.
• Copper supply is tightening after years of underinvestment: Berenberg expects global mined production to peak in 2029, exploration budgets have nearly halved since 2012, and the deficit could reach almost 32% of mined supply by 2040.
• Energy security is gaining importance as UK primary refining capacity has fallen 48% since 2009 and European capacity excluding the UK has declined 11%; listed global energy companies’ capital expenditure remains slightly below its 2014 peak while oil and liquid-fuel demand has grown by more than 10%.
• Governments and companies are accepting higher costs to secure supply through strategic inventories, diversified sourcing, reshoring and policies such as the 2022 US CHIPS and Science Act.
• AI infrastructure faces concentrated supply and heavy demand: advanced chip fabrication requires tens of billions of dollars and years to build, while Dell Technologies’ AI server backlog rose from about $3.8 billion in 2024 to $95 billion and NVIDIA’s supply chain is running flat out.

Takeaway: Investors should focus on metals and mining, oil and gas, and information technology businesses with scarce assets, constrained supply and pricing power, while recognising that the theme depends on sustained demand and investment conditions.