Investing in Lead is Not What You Think

Lead (Pb) electrolityc

What comes to mind when you think of lead? Bullets, X-ray vests, and the cognitive decline of the Roman Empire? Lead is one of those overlooked pieces of the Periodic Table of Elements, since generally speaking it is one of the things we want to minimize in society. Well I think things are looking up for lead heads. A study recently published by the Quantum Energy Research Centre and Korea University (part of the SKY universities of South Korea like Harvard but for South Korea) looked into using a lab created modified lead-apatite as a room temperature and ambient pressure superconductor. Superconductors are so important the Department of Homeland Security is funding nitrogen cooled superconductors (expensive) to have electrical plants share energy with little to no loss so during power outages so critical infrastructure can stay online. The implications of a superconductor which can operate at room temperature is potentially world changing in more ways than one. This is the part where your inner skeptic is shouting that’s what they said about cold fusion and other hypothetical technologies. The study tested a ground up powder and a metal like substance. Here is a video in case you didn’t want to read the paper (a paper might I add that was published twice one with 6 researchers and one with 3 researchers – 3 is the limit for sharing a Nobel Prize).

It’s not levitating it’s leaning with style! (researcher said it was produced imperfectly)

I’ve taken a snapshot of the current internet reaction to the news:

Naturally they are skeptical or just in general not forward thinking about the financial implications, but the research team has provided specific instructions on making the experiment repeatable therefore it likely will be and soon. Financial markets move faster than confirmations. We try to beat the earnings predictions we can’t wait until the CEO confirms it on a conference call with investors. I see the video evidence, I see scientist motivation to get prestige, and I see well written instructions on producing the material in two different forms what’s more to question? The critical current problem of lead has been acknowledged since 1913. Ukranian scientists observed the Meissner effect of PbO in 1933. This study fell short of the scientific breakthrough of the century in my personal opinion due to the slightly flawed results, however I still think they are on the right track of thinking. Generally speaking all superconductors perform worse near their critical temperature so maybe this a breakthrough for semi-cold superconductors. In the words of Dr. Derek Lowe:

Just set your Easy Vacuum Bake Oven to 1700 Fahrenheit and turn your nose away from the lead fumes when you open the door!

Well the first question who stands to gain from this?

If this material works you’ll need hundreds of thousands of miles of it to replace the current electrical grid which loses 100 Billion Kilowatt-Hours on transmission losses per year (and that is just in the US). This will reduce costs for electric companies. The list of beneficiaries doesn’t stop there though medical facilities, computing centers, transportation companies (i.e. trains), and the list goes on and on (maybe Mattel can make a Hoverboard Barbie and then we can use litigation finance instruments on the following lead poisoning lawsuit) will all benefit from room temperature superconductors. These kinds of efficiency boosts have cascading effects through an entire economy, because energy production is central to economic output. Compare and contrast countries who are net exporters of energy in the G7 with net importers of energy and their relative GDP.

We know the why we don’t know who or the when for a finished product manufacturer, but can speculate it would come from the relatively small pool of electrical cable manufacturers (listed are some major ones, but there are some small companies which trade publicly like Optical Cable Corp, Taihan, Daewon, or Gaon). Huge consolidation from 1950 to the early 2000s in the global market.

Southwire – Owned by the Richards Family not publicly traded

Nexans – $NXPRF for OTC or $NEX on the Paris Exchange

LS Cable & System – $LSCORP on the Korean Exchange

Prysmiam Group – $PRYMY for OTC

Furukawa Electric – $FUWAY for OTC

Elsewedy Electric – $SWDY on the Egyptian Exchange

Bambach Wires & Cables – Not publicly traded

What about the raw materials? Who mines lead?

Well 4 of the top 5 lead mines in the US are owned by The Renco Group which is privately held. The largest mine is in Alaska and is operated by Teck Resources ($TCKRF or $TCK).

Outside the US:

Glencore PLC ($GLCNF) – Australia

South32 ($SHTLF) – Australia

Newmont Corp ($NEM) – Mexico

Buenaventura ($BVN) – Peru (The author of this article has purchased shares of this prior to writing)

Rio Tinto ($RIO or $RTNTF) – Worldwide

I’m sure there are more, but this is a good starting point. Compare the P/E ratios and the overall health of the company. There is a reason I left Hecla Mining off the list.

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