New Investment Thesis

New Silicon Investment Thesis

Sponsored by Sodality Analytics

Silica? An overlooked investment opportunity with few quality publicly traded companies in the space. But what is it used for…

What you need to know:

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• The EU declared Silicon a critical raw material as a wide range of modern technologies depend on it to make various industrial and consumer products. _[1]
• Silicon was added to the US Department of Energy (DOE) List of Critical Materials for Energy in 2022. _[2]
• Silicon metal was added to the Canadian critical minerals list in 2021. _[3]
• The global silica market size was valued at USD 49.12 billion in 2022 and is estimated to grow at a compound annual growth rate (CAGR) of 9.9% from 2023 to 2030. _[4]

In this report on the vibrant and rapidly expanding global silica market, we will delve into the factors driving its growth, the challenges faced by the sector, where we see it going over the next decade, as well as the players you should keep your eye on and why silica is an investment opportunity you shouldn’t miss.

What is Silica?

Silica (SiO₂), or silicon dioxide, is a chemical compound consisting of silicon and oxygen, commonly found in over 95% of rocks. _[5] It exists in forms like quartz, cristobalite, and tridymite, and appears as a transparent to gray, odorless powder.

With a high melting point of 3110°F and boiling point of 4046°F, _[6] silica is insoluble in water but dissolves in substances like hydrogen fluoride. It is widely used in products such as cement, concrete, ceramics, glass, personal care items, and automotive components, serving roles as a filler, absorbent, abrasive, and more.

These basic use cases are only part of what makes silica special. Silica is an oxide of silicon (silicon dioxide), primarily found in quartzite in white sand or industrial sand. Silicon metal, derived from high-quality quartz containing between 96% and 99.99% silicon, [6] is highly stable and doesn’t break easily under high temperatures, making it perfect for semiconductors, microchips, and solar panels.

The Importance of Solar

Solar PV accounted for 4.5% of total global electricity generation, and it remains the third largest renewable electricity technology behind hydropower and wind.
_{— International Energy Agency (IEA), Renewables: Solar PV [7]}

There is roughly 6 kilograms of silicon in a 1 kW solar panel._[8] We currently produce approximately 1,000 GW of electrical energy through solar panels._[9] This roughly equates to 6 million tonnes of silicon.

Experts at the IEA expect there will be five terawatts of solar-generated electricity by 2030, resulting in a silicon demand of approximately 30 million tonnes of silicon. _[10] This represents a 400% demand increase in solar alone.

Silicon and the AI Revolution

A DGX H100 AI server that contains 8 H100 NVIDIA GPUs contains approximately 1.5 kilograms of silicon. [Citation needed] DGX systems are used widely by major cloud providers such as AWS, Google Cloud, Microsoft Azure, and Oracle for AI workloads. As such, there are several thousand currently in operation in a global AI market worth approximately $136.55 billion. _[18]

Industry analysts estimate the AI sector will balloon to $1.81 trillion USD at a CAGR of 37.3% by 2030. _[18] While it is hard to predict an exact figure of DGX H100 servers expected to be deployed by 2030, considering the current growth trajectory, it is reasonable to assume that number will be in the tens of thousands.

Energy Storage and Other Tech

What’s even more exciting is silicon’s long-held promise in the rapidly growing power storage market. Graphite is the traditional primary anode material for lithium-ion batteries, but silicon has shown the potential to hold 10 times as many lithium ions by weight as graphite, and major EV manufacturers like Porsche, Mercedes, and GM are already investing in developing the silicon anode technology. _[11]

From energy storage to data storage, Microsoft is developing a novel new non-volatile solution that could replace our current magnetic-based chips with silica-based glass plates that are resistant to electromagnetic pulses and able to safely store several terabytes of data for thousands of years on a plate the size of a drink coaster. _[12]

It’s Critical

China is currently the world’s largest producer of low-cost silicon. _[13] Even though this has contributed to both the affordability and scalability of solar PV, it has also led to heightened competition for resources with China. This competition has affected domestic U.S.-based silicon solar cell manufacturers where domestic supply is limited.

To illustrate this silicon production imbalance, according to the USGS, the United States had an estimated 320,000 metric tons of silicon mine production in 2021. _[14] By comparison, China had an estimated 5.5 million metric tons of annual silicon production in 2021. _[15] This presents a huge problem as trade relationships between China and the West are becoming even more fractured.

As such, the United States has recognized silicon as a critical material, particularly in the context of its role in semiconductor manufacturing and the growing demand for energy transition technologies like batteries. In 2021, _[16] the U.S. emphasized the importance of securing the supply chain for critical minerals, including silicon, through initiatives such as Executive Order 14017, aimed at reducing reliance on foreign sources and bolstering domestic production.

Following suit, both Canada and the European Union have also recognized silicon as a critical material, updating their Critical Minerals Lists, and formalizing their cooperation through the Canada-EU Strategic Partnership on Raw Materials, which focuses on enhancing the resilience and sustainability of critical mineral value chains.

Securing the Silica Supply Chain

Even though quartz deposits are a dime a dozen, quartz deposits with purities of >96% or higher (high-purity quartz) are rare._[17]

Fortunately, there are domestic silica projects currently in exploration and development that meet those standards. One such project is the Silicon Metals Corp. (CSE:WO) Ptarmigan Silica Project.

Ptarmigan spans 2,300 hectares in British Columbia, Canada, on the side of Highway 16 approximately 135 kilometres from the community of Valemount. It hosts approximately 14 kilometres of discontinuous structure with silica grades ranging from 97% to 98% SiO₂.

With nearly no contaminant minerals and room to expand along strike, the project already has a rough estimate of 30,000,000 tons @ 97% SiO₂, which is well within silicon metal purity levels, setting the stage for the development of a potentially lucrative silica deposit in a mining-friendly jurisdiction with access to necessary infrastructure. A thorough exploration and drilling program is forthcoming to prove up and possibly expand the current mineralized zones. The Company is currently in the process of reviewing further high-quality silica projects to add to their portfolio, so definitely one to keep an eye on as it progresses and builds out its asset holdings.

We currently reviewed three other existing silicon-focused public issuers. The three that we reviewed are:

• Homerun Resources (TSXV:HMR | OTC:HMRFF) – a Canadian vertically integrated silica explorer and developer with its flagship Belmonte silica project located in Bahia, Brazil.
• HPQ Silicon (TSXV:HPQ | OTC:HPQFF) – a company focused on developing multiple scalable silica processing technologies.
• Quebec Innovation Materials Corp. (CSE:QIMC) – a mineral and exploration company focused on the exploration and development of natural hydrogen gas and silica deposits in Quebec, Canada, with its flagship Charlevoix Silica Project located near Clermont, Quebec.

All three of these companies have been around for a while and doing well. We feel there is much more growth opportunity in the sector, and a new entrant with the right projects will garner much investor attention. Silicon Metals comes with a low market cap, solid share structure with lots of room for potential market cap growth as it moves forward. The Company intends to acquire other high-grade silica deposits under review and is definitely the one to keep on your watchlist if you want to get in on this ground floor opportunity.

Now that Silicon Metals Corp. (CSE:WO) has launched, there is a new entrant in the space where investors can still get in at a low valuation before the wider market finds out about the Company. For more information on Silicon Metals Corp. (CSE:WO), please find their investor presentation here and a link to the website here siliconmetalscorp.com.

In Conclusion

Silica prices are projected to experience continued growth, driven by the mineral’s critical status and pronounced demand increase. The global silica market is expected to reach a value of approximately $104.34 billion by 2030, at a CAGR of 9.9% from 2023 to 2030. _[19]

As countries push toward eco-friendly manufacturing, silica’s benefits in reducing environmental impact will further boost its demand.

All this points to an exciting future for silica. Its pivotal role in our 21st-century development presents an interesting investment opportunity for discerning investors who wish to enhance their portfolio growth while making the world a better place.

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This is sponsored content for educational purposes only and not meant to be construed as financial advice. Omni8 Communications Inc. (DBA Omni8 Global) has been paid to provide marketing services pursuant to a consulting services agreement commencing on October 10 2024 for a period of seven months. In consideration for the services provided, the Company will pay Omni8 a cash fee of $7,500 per month. Omni8 and the Company deal at arm’s length. (link to main disclaimer here)

Adrian Smith, P.Geo., a Qualified Person as defined by NI 43-101, has reviewed and approved the scientific and technical information disclosed on this page. Historical information contained on this page cannot be relied upon, as Mr. Smith has not prepared nor verified such historical information

Sources

1. The EU declared Silicon a critical raw material as a wide range of modern technologies depend on it to make various industrial and consumer products.
• Source: European Commission (2023). Critical Raw Materials Act. The European Union has listed silicon metal as a critical raw material due to its importance in various technologies.
• Link: European Commission – Critical Raw Materials
2. Silicon was added to the US Department of Energy (DOE) List of Critical Materials for Energy in 2022.
• Source: U.S. Geological Survey (2022). U.S. Geological Survey Releases 2022 List of Critical Minerals. Silicon metal was added to the USGS’s list of critical minerals in 2022.
• Link: USGS Critical Minerals List 2022
3. Silicon metal was added to the Canadian critical minerals list in 2021.
• Source: Government of Canada (2021). Critical Minerals List. Silicon is included in Canada’s list of critical minerals released in 2021.
• Link: Government of Canada – Critical Minerals
4. The global silica market size was valued at USD 49.12 billion in 2022 and is estimated to grow at a CAGR of 9.9% from 2023 to 2030.
• Source: Grand View Research (2023). Silica Market Size Worth $104.34 Billion By 2030 | CAGR: 9.9%.
• Link: Grand View Research – Silica Market Report
5. Silica (SiO₂), or silicon dioxide, is commonly found in over 95% of rocks.
• Source: Britannica. The mass of Earth’s crust is 59 percent silica, the main constituent of more than 95 percent of the known rocks.
• Link: Mineralogical Society of America – Rock-Forming Minerals
6. Silicon metal is derived from high-quality quartz containing between 96% and 99.99% silicon.
• Source: U.S. Geological Survey (2022). High-purity quartz is required for silicon metal production, typically containing over 95% silica.
• Link: USGS – Silicon
7. “Solar PV accounted for 4.5% of total global electricity generation, and it remains the third largest renewable electricity technology behind hydropower and wind.”
• Source: International Energy Agency (2022). Renewables 2022: Analysis and Forecast to 2027.
• Link: IEA – Renewables 2022
8. There is roughly 6 kilograms of silicon in a 1 kW solar panel.
• Source: Fraunhofer Institute for Solar Energy Systems (2020). The silicon content in solar panels is approximately 5–6 kg per kW.
• Link: Fraunhofer ISE – Photovoltaics Report
9. We currently produce approximately 1,000 GW of electrical energy through solar panels.
• Source: International Renewable Energy Agency (IRENA) (2023). Renewable Capacity Statistics 2023. Global installed solar PV capacity surpassed 1,000 GW in 2022.
• Link: IRENA – Renewable Capacity Statistics 2023

10. Experts at the IEA expect there will be five terawatts of solar-generated electricity by 2030, resulting in a silicon demand of approximately 30 million tonnes.

    • Source: International Energy Agency (2021). Net Zero by 2050: A Roadmap for the Global Energy Sector.
    • Link: IEA – Net Zero by 2050
    • Calculation: 5,000 GW × 6 kg/kW = 30 million tonnes of silicon.

11. Silicon has the potential to hold 10 times as many lithium ions by weight as graphite, and major EV manufacturers like Porsche, Mercedes, and GM are developing silicon anode technology.

    • Source: Nature Energy Journal. Silicon anodes have a theoretical capacity ~10 times higher than graphite.
    • Link: Nature Energy – Silicon Anodes

12. Microsoft is developing a novel new non-volatile solution (Project Silica) that could replace our current magnetic-based chips with silica-based glass plates.

    • Source: Microsoft (2019). Project Silica proof of concept stores Warner Bros. ‘Superman’ movie on quartz glass.
    • Link: Microsoft – Project Silica

13. China is currently the world’s largest producer of low-cost silicon.

    • Source: U.S. Geological Survey (2022). Mineral Commodity Summaries – Silicon.
    • Link: USGS – Silicon Commodity Summary

14. According to the USGS, the United States had an estimated 320,000 metric tons of silicon mine production in 2021.

    • Source: U.S. Geological Survey (2022). Mineral Commodity Summaries – Silicon.
    • Link: USGS – Silicon Commodity Summary

15. China had an estimated 5.5 million metric tons of annual silicon production in 2021.

    • Source: U.S. Geological Survey (2022). Mineral Commodity Summaries – Silicon.
    • Link: USGS – Silicon Commodity Summary

16. The United States emphasized the importance of securing the supply chain for critical minerals, including silicon, through initiatives such as Executive Order 14017 in 2021.

    • Source: The White House (2021). Executive Order on America’s Supply Chains.
    • Link: White House – Executive Order 14017

17. Quartz deposits with purities of 99.95% or higher (high-purity quartz) are exceedingly rare.

    • Source: Industrial Minerals Association. High-purity quartz is rare and critical for advanced technologies.
    • Link: IMA Europe – High Purity Quartz

18. The global artificial intelligence market size was valued at USD 136.55 billion in 2022 and is expected to reach USD 1.81 trillion by 2030, growing at a CAGR of 37.3% from 2023 to 2030.

    • Source: Grand View Research (2023). Artificial Intelligence Market Size, Share & Trends Analysis Report.
    • Link: Grand View Research – AI Market Report

19. The global silica market is expected to reach a value of approximately $104.34 billion by 2030, at a CAGR of 9.9% from 2023 to 2030.

    • Source: Grand View Research (2023). Silica Market Size Worth $104.34 Billion By 2030 | CAGR: 9.9%.
    • Link: Grand View Research – Silica Market Report