Top investment strategist sees ‘massive’ value in metals

Published Wed, Dec 8 202110:28 PM ESTUpdated Mon, Dec 13 20217:44 AM EST

There is "still a massive amount of value to be added" in metals that are benefitting from electrification and other renewable energy trends, according to veteran investment strategist David Roche. Roche, president of investment firm Independent Strategy, was alluding to metals such as cobalt, lithium and rare-earth minerals, during CNBC's latest Pro Talks with Steve Sedgwick . Roche believed that the opportunity to invest in these metals lay somewhere between them being mined and used in a wind farm or an electric car battery, for example. He said that "even if you take a fairly pedestrian outlook for electric vehicles and for wind farms, renewables, you will find that the amount of metal needed even at today's valuations, and certainly at tomorrow's valuations, will exceed the internationally traded value of oil within a decade." Cobalt is the most expensive of the metals used in lithium-ion batteries , which are the rechargeable batteries used in a number of electrical goods. The price of cobalt has also been historically volatile, partly due to the fact that it is typically produced as a byproduct of nickel and copper mining, so is tied to their fluctuations in price. Its production is also geographically limited. Roche said there were a number of ways to invest in these metals, indicating that investors could get exposure to "Elon Musk's batteries" by buying Tesla shares. Investing directly in the metals themselves by buying them as exchange-traded funds would be another option, Roche said. He warned that investors should be "cautious" with this method, however. He said investors could also buy shares in mining companies, admitting that while "not all of them [are] particularly savory … they know how to get stuff out of the ground and maybe they are the major winners." Roche warned that there tended to be a lot of "baggage" involved when investing in these metals. For example, he said that "it is an area which depends on its output on countries which have done traditionally an extraordinarily bad job of managing themselves, like [the] Democratic Republic of Congo for cobalt." The DRC produces more than 70% of the world's cobalt supply, according to the Council on Foreign Relations . — CNBC's Magdalena Petrova contributed to this story.

There is "still a massive amount of value to be added" in metals that are benefitting from electrification and other renewable energy trends, according to veteran investment strategist David Roche.