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Commentary

‘There’s lithium in them thar hills!’

Mining has been a niche play for private capital, but as the energy transition fuels demand for rare minerals, the sector is grabbing attention.

Mining has traditionally been a niche play for private capital, but as the energy transition fuels demand for rare minerals, the sector is getting more attention.

One firm that has been grabbing headlines is Appian Capital Advisory, a PE mining specialist that raised eyebrows by picking the UK’s former Deputy Prime Minister Dominic Raab as a strategic adviser on global affairs.

It is a controversial move for a sitting member of Parliament, but not unusual; PE has a track record of plucking policymakers both in the UK and abroad to advise on public affairs. Former finance minister George Osborne, for example, was an adviser to BlackRock. The Carlyle Group, meanwhile, has practically made it a business model. It comes at a time when a lot of governments are putting the control of strategic resources high on their agendas. It also makes a lot of sense.

The appointment coincided with an article from the Financial Times in which Appian’s chief exec, Michael Scherb, says London should ditch its aspiration of becoming a tech hub and instead focus on basic resources. It’s a tough sell, but you can see the logic.

Many of the assets within Appian’s portfolio involve commodities that are critical to the energy transition, such as lithium, copper, nickel and cobalt. These minerals are not only used to make things like solar panels and batteries but are also critical components in chip-making—another area that is attracting investment by dint of its growing strategic importance to governments.

PitchBook data shows that PE investment in mining saw an uptick in 2022, with roughly $6.74 billion invested across 71 deals globally. While dealmaking slowed last year—as seen across the asset class—there were still 59 deals worth a total of $2.72 billion. However, many of these investments weren’t made directly into mines but into downstream operations and ancillary products and services. To quote Mark Twain: “When everyone is looking for gold, it’s a good time to be in the pick and shovel business.”

Featured image by Carla Gottgens/Getty Images

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