| Dear Reader, The Age put out the following headline in July 2003: ‘Andrew Forrest has a grand $1.2bn plan
for tiny Perth mining company.’ If you don’t remember, this was a super-volatile time in markets — and the world generally. September 11 was still fresh. The US was ramping up multiple wars. We had crazy geopolitical risks. The Internet (like AI today) was this weird new thing we’d known about for a while…but was now finally disrupting everything. Gold was making new highs. Sound familiar? Back then, a company that would be called Fortescue Metals was little more than a light bulb above Andrew Forrest’s head. What Forrest saw in the early 2000s was a ‘super-squeeze’ in iron ore and base metal prices. A ‘super-squeeze’ is when the prices of certain resources go up…not just because of demand…but also because of supply constraints. This was the back-drop of Twiggy’s GIANT BET He figured everyone was underestimating how China's hunger for iron ore would soar as its steel production ramped up. But he saw that the supply just wasn’t there. He wagered $15 billion of mostly borrowed money to start buying up remote iron ore assets in the Pilbara desert. Right under the noses of the giants… At the time, these deposits were stranded. Sure, iron ore mining in Australia is relatively cheap and relatively easy to extract. Simply load rock on a boat and ship it to China’s massive steel refineries. But few consider the vast infrastructure required to get to that point. Iron ore is a bulky commodity. Mine feasibility studies include costs well beyond the mining operation: railways, ports, loading facilities. It’s this barrier to entry that enabled the majors to retain their grip over iron ore supply in Australia. Yet these challenges didn’t deter Forrest. When iron ore prices were still sitting below $20 per tonne…Twiggy went to work. He ‘read the squeeze’…and the rest is history. In mid-2024, another ‘super-squeeze’ is forming… Only this time, it’s not iron ore. It’s in what our exploration geologist expert calls ‘critically endangered minerals’. As FX Empire just put it, it’s due to the ‘the perfect storm of geopolitics, climate change and energy transition.’
This is happening after a period of massive underinvestment in the resources sector. Where miners prioritised paying off debts over financing new projects. Back in the 2000s, this was Twiggy’s problem, too. Getting hold of cash to build a capital-intensive iron ore operation was almost impossible. That’s why his blue-sky plan for iron ore was mocked by many journalists and insiders at the time. DESPITE the fact commodity prices were coming back to life…just as they are in 2024… Today, demand is surging once more. But the industry is not prepared for it. We’ve just had years of underinvestment in new mines and oilfields due to low prices in the 2010s. This has now created scarcity in supply as demand recovers. A mirror to the supply-demand imbalance that gave birth to Fortescue Metals Group… Today, instead of China, we have the clean energy transition. The push towards electrification, renewable energy and decarbonisation is squeezing things even further. Intensifying demand for metals like copper, lithium and nickel needed for batteries and clean technologies. One final parallel… Just like in the early 2000s, mining stocks are DEEPLY undervalued. THIS is your ‘in’. It’s these stocks you should be honing in on while they’re still criminally cheap. Basically, 2024 is like: A resource super-cycle Groundhog Day And if you cotton on to this before most mainstream investors… …there’s the scope to make a LOT more money than just sinking your cash along with the crowd into already-hyped-up AI stocks. Of course, it’s still high-risk investing. No guarantees. But if you’re up for it, click here to learn about ‘The Next Potential Aussie Mining Disruptor’.
Regards, James Woodburn,
Publisher, Fat Tail Investment Research | 
