Before becoming a portfolio manager with Perennial Partners, Samuel Berridge had studied to be a geologist and chemist – the latter teaching him skills he thought little of at the time.

Several decades later, as he watches the world transition to new energy sources and traditional mining groups fight for relevance in a new economy, Mr Berridge has developed a new appreciation for the lessons he learned as a youth.

“It’s actually coming in quite useful now with the evolution and uptick in battery chemistry and the trending of a few of these traditional mining companies towards more industrial chemicals companies,” he told Reach Markets.

Mr Berridge is no stranger to resources markets. Shortly after graduating he became a resources analyst for the Royal Bank of Scotland, and after a few short years (and several good calls) his performance caught the attention of Perennial Partners.

In 2012 he made the jump to Perennial, first as an analyst but gradually finding himself managing portfolios for the group, with a keen eye on commodities and resources.

Now, Mr Berridge believes we’re staring down the barrel of a new commodities boom, one that will require double the resources of the last boom, with battery metals expected to take centre stage.

“Everybody knows how big the oil industry is; it’s a huge industry. We’re trying to replace that with relatively new technologies,” he said.

“The decarbonisation process with the technology that is available today is going to be incredibly metals intensive and that’s undeniable. 

“We’re only just feeling the very early stages of battery demand or broader decarbonisation demand within the metals space now. It has got a lot further to go.”

Mr Berridge expects there will be a long-lasting shortfall in the supply of many of the metals and resources needed to produce batteries and green energy technologies, adding that he is currently looking for exposure to this sector through equities.

Sensible policy making hampered by overly zealous advocacy

Businesses thrive on certainty, but the Australian energy sector has struggled to find this steady footing in recent years as the Federal Government has to date struggled to enact sensible policies around climate change and the green energy transition, Mr Berridge said.

Part of the problem facing the Federal Government comes down to the complex requirements of such a transition, Mr Berridge said, noting that most studies point to a need for natural gas as a source of dispatchable energy for the next decade or two at least.

“That is the reality. The problem is that a lot of people don’t accept that reality,” he said.

“They’re happy to wait for new technologies which don’t exist yet to magically pop into existence and enable a transition to 100% renewable power straight away. Because there’s a lot of people screaming for it, politically it makes sensible carbon policy challenging.”

Fortunately, the state governments and many of the companies within the affected industries have made important strides themselves to smooth the transition.

Mr Berridge flagged the big miners in particular, noting the commitment from companies with the funds required to finance the shift to a new energy source is “beyond question”

“There’s huge dollars and a heap of management time being spent on it,” he said. 

Additionally, Mr Berridge doubts the Federal Government will backflip on its commitment to natural gas, which can replace coal while reducing emissions by 30%.

Join Samuel Berridge this Friday, 5th November at 12pm (AEDT) on our weekly The Insider: Meet the Fund Manager webcast to hear him talk about his favourite stocks, investment strategy, market insights and more. There will also be an opportunity to ask questions during the session. To book yourself in, click here.

Sources:

• Scientific Reports, On the climate benefit of a coal-to-gas shift in Germany’s electric power sector
• ABC News, Adam Bandt says gas is just as dirty as coal. Is he correct?