Critical Minerals, Critical Moves: Q&A With BMO Capital Markets’ Ilan Bahar

International Finance: Metals & mining has confirmed notably delicate to geopolitical shifts. How are you guiding your purchasers by means of this panorama?

Ilan Bahar: Within the unstable setting they’re experiencing at this time, it is vital that our purchasers deal with long-term macro fundamentals. For instance, power transition and electrification traits will not be going away and the necessity for important minerals isn’t abating. We consider long run provide and demand fundamentals will persist by means of this era of volatility, with robust demand persevering with a long-term bullish cycle for key commodities that assist power transition.

Gold and silver costs are testing all-time highs as valuable metals proceed to be seen as a pure hedge to broader market dislocation. So for our purchasers, it is vital to not let short-term, reactionary decision-making impair their long-term strategic precedence to construct shareholder worth.

GF: International metals dealmaking slowed final yr, however BMO nonetheless delivered spectacular outcomes on this sector. Is your deep trade experience the important thing differentiator, or are extra components contributing to your success?

Bahar: BMO has remained steadfast in its dedication to the sector. Subsequent yr, we will likely be internet hosting the thirty fifth version of our annual International Metals, Mining & Critical Minerals convention. We’re proud to say it’s the main convention on the earth within the sector, setting the tone for the calendar yr for each company purchasers and the institutional investor neighborhood. We’re happy with our group’s deep sector information and the power of our consumer relationships throughout the whole commodity advanced.

GF: Does the present macroeconomic backdrop counsel a doable uptick for M&A exercise in metals & mining going ahead?

Bahar: We even have seen an affordable quantity of consolidation amongst junior and intermediate producers the place the commercial logic of the mix is robust and creates synergies. The mixture supplies elevated publicity to present steel costs, and the chance presents itself to turn into bigger and extra related to buyers within the sector. 

Measurement brings added liquidity and, in idea, extra investor consideration. Giant-cap consolidation within the gold area was extraordinarily lively up to now few years, leading to a number of clear trade leaders in gold—Newmont, Agnico and Barrick in North America—and we’re seeing the following wave of consolidation now among the many intermediates and juniors.

We anticipate producers trying to bolster their longer-term growth pipelines by means of earlier-stage acquisitions to make the most of robust money positions for future growth and, the place the chance exists, to construction accretive transactions, provided that earlier-stage corporations commerce at giant valuation reductions to the producers. Now we have seen notable transactions within the silver area just lately, pushed by a relative shortage worth of major silver belongings.

GF: Authorities businesses and firms are specializing in important minerals and uncommon earth components, recognizing their position in powering the AI revolution. Have you ever expanded your choices on this area?

Bahar: We’re attuned to the macroeconomic elements that can drive the elevated significance of important minerals to the world’s financial engine. The best demonstration of our dedication was the rebranding of our convention in 2023 to particularly embrace important minerals within the identify, but additionally by dedicating a portion of the agenda to them. Along with our fairness analysis dedication, we now have funding bankers centered on important minerals stationed throughout the globe, from our places of work in Toronto, New York, London, Beijing, Vancouver, and Melbourne.

GF: Sustainable finance has traditionally adopted boom-and-bust cycles. Does the present cycle signify a basic shift from this sample?Bahar: A number of sustainable applied sciences have now achieved a price benefit over incumbent applied sciences; renewable energy has the bottom marginal value for energy technology, and energy-efficiency applied sciences now have constructive web current worth for a lot of investments. These adjustments—mixed with the continued differential demand for carbon-free electrical energy and enhancements to the facility grid—imply that we’re seeing a persistent demand for these applied sciences regardless of coverage uncertainty in sure jurisdictions, and a continued long-term want for the metals and minerals that assist these investments: copper, uranium, and demanding minerals.