China Securities Co., Ltd. (CSC) points out that it remains optimistic about strategic metal investment opportunities that possess the following characteristics: (1) Strong resource scarcity coupled with highly rigid and fragile supply: Strategic metal varieties that are relatively rare in the earth's crust, have a low reserve-to-production ratio, and have experienced years of over-exploitation often exhibit these traits. When combined with a high concentration of resource/supply geographic distribution, this naturally endows them with a "call option" stemming from supply vulnerability. Furthermore, high resource concentration often leads to strategic attribute premiums due to resource nationalism in resource-rich countries and the tendency to "weaponize" strategic resources. (2) Demand benefiting from industrial transformation and national strategic reserves: Strategic metals are essential for developing new quality productive forces and will "dominate the future." In the face of a new global wave of technological revolution, the elemental demand structure is undergoing significant changes, ushering in a spring for strategic metal demand. New quality productive forces such as new energy, new materials, and artificial intelligence will initiate a new cycle of demand for strategic metals. Additionally, in an "era of chaos," the security of global resource supply is under threat, driving countries and various production stages to raise desired inventory levels to mitigate potential supply disruption risks. Metals applicable to the military industry are particularly critical in this context.
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