Logan Project: A Critical Mineral Play Ignored By ESG Funds?

We’re always being pitched that ESG (Environmental, Social and Governance) investing is the way of the future. These funds cast their investments as sustainable and ethically sourced. But are they really putting their money where their mouth is? Or are they simply virtue signaling heading into a potential critical mineral crisis? I think it's the latter.

Now, here’s a new company to us, Almadex Minerals, and their Logan Zinc-Silver Project in the Yukon.

ESG Blind Spot? Critical Minerals

Here's the deal: the Logan Project holds a significant zinc-silver resource. These aren’t just shiny metals — these are critical minerals. Zinc is essential for galvanizing steel (think infrastructure, renewable energy projects), and silver is vital for electronics and solar panels. Without these essential minerals, the green transition stops dead in its tracks.

So why isn’t every ESG fund falling all over themselves to put money into Almadex and get Logan developed.

It becomes a huge issue because it comes down to a very basic flaw in the way ESG is most often used. In reality, a disproportionate number of these funds prioritize easily quantifiable metrics, such as carbon emissions, while ignoring the holistic picture. Because of the nature of mining, it has a significant environmental effect. Minerals responsibly mined from high-standard projects such as Logan, under some of the world’s strictest environmental governance, provide the better choice. This effort is much more effective than relying on supply chains from nations with low environmental and labor standards.

It's an unexpected connection: ESG funds, in their quest to appear green, may be inadvertently hindering the development of resources vital for a truly green future. Are they prioritizing optics over reality?

The Yukon has a strong, transparent, and public regulatory system in place for mining. It's not a Wild West free-for-all. While projects face strong environmental scrutiny, there is extensive consultation with First Nations communities.

• Are ESG funds willing to confront the hard realities of resource extraction in the developed world, or will they continue to outsource the environmental impact to jurisdictions with less stringent regulations?

Yukon's Regulatory Environment A Stumbling Block?

Perception matters. Some ESG funds may reject any mining project, no matter how responsible, just for the fact that it’s mining. This is short-sighted. Deep responsibility has allowed this Yukon mining operation to flourish due to tight oversight and vigorous local involvement. It’s a much better decision than sourcing those minerals from countries that completely disregard environmental and social standards.

This highlights another unexpected connection: Choosing to ignore projects like Logan, due to a perceived regulatory risk, actually increases reliance on mines operating under far less scrutiny.

Here's where things get really interesting. If Western countries do not allow the production of their own critical mineral resources, they put themselves at the mercy of… you guessed it. China now has a stranglehold on the global supply chain for most critical minerals.

• Would you rather buy a conflict-free diamond with a traceable origin, even if it costs a bit more, or a cheaper diamond of unknown origin that may be funding unethical practices? The same principle applies to critical minerals.

How intelligent is it to cede control over such critical resources to our most dangerous geopolitical rival? This isn’t simply an economic argument. It’s one of national security. Overreliance on foreign sources for critical minerals, including geopolitical adversaries, exposes us to supply disruptions and price manipulation.

Geopolitical Implications Ignored?

The Logan Project, even if it’s not the magic fix to all our woes, is an important step toward more independence in our resources. By excluding ESG funds, they lose out on a smart, profitable investment. This decision presents a major strategic vulnerability.

It’s high time ESG-focused funds to rethink their priorities. This requires them to go beyond simplistic, one-dimensional sustainability focused metrics and expect disclosure that represents a more holistic view of sustainability. Understanding the key role responsibly sourced critical minerals will play is key to the green transition. By funding more projects like Logan, we can all do our part to ensure a cleaner, greener, and more energetic future. The latter? A scenario in which the world’s green ambitions are again held hostage to the geopolitical realities. Something to be angry about, isn't it?

Consider this table:

The Logan Project, while not a solution to all our problems, represents a step towards greater resource independence. By ignoring it, ESG funds are not just missing out on a potentially profitable investment; they are contributing to a strategic vulnerability.

It's time for ESG funds to re-evaluate their priorities. They need to look beyond simplistic metrics and embrace a more nuanced understanding of sustainability. This means recognizing the vital role that responsibly sourced critical minerals play in the green transition and supporting projects like Logan that can help secure a more sustainable and secure future. The alternative? A future where our green ambitions are held hostage by geopolitical realities. Something to be angry about, isn't it?