Resources have been in the news since March 2026 as the energy shock from the Middle East conflict ripples around the world, impacting emerging market oil importers like India and the Philippines negatively. In the longer term, however, the position for emerging markets in key strategic resources looks more advantageous. Emerging markets have moved into leadership positions in key technologies supporting the AI buildout, such as semiconductor manufacturing (see Figure 1a) and the development and manufacture of renewable energy technologies like solar panels (see Figure 1b).
Both of these sectors are attracting vast amounts of capital expenditure in both developed and emerging markets, as Figures 2a and 2b show.
The two sectors are also inextricably linked. The AI revolution is contributing to rising electricity demand, which is in turn increasing demand for power generation sources, whether via fossil fuels, nuclear, or renewables. The sudden jump in oil and LNG prices sparked by the Iran war in March 2026 has also illustrated the fragility of fossil fuel supply chains and is likely to further accelerate global investment in renewables, electrification, and efficiency.
Moreover, the two trends rely on many of the same mineral inputs to enable the construction of data center server clusters, electrification, and energy storage. This is resulting in a surge in demand for specific materials like copper, cobalt, nickel, lithium, rare earths, and platinum group metals (PGMs).
Of these key minerals, critical to both AI and the energy transition, a significant share of economically viable reserves and production is concentrated in emerging economies (see Figure 3).
Regional Strengths and Geopolitics
For example, South Africa remains the most reliable global source of PGMs. Chile, Zambia, Indonesia, and the Democratic Republic of the Congo (DRC) supply the balance of global copper, while China dominates in rare earths mining and especially in processing. Indonesia is also the swing supplier in nickel, and the DRC dominates cobalt mining. The world's largest lithium miner is a developed market (Australia), but the rest is produced in Chile, Argentina, China, and various African nations.
The location of these minerals has been given particular significance by the geopolitical tension between the US and China. Trade relations are worsening and the two global powers have established rival technology and military-industrial stacks. In particular, China has built a dominant position in metals and rare earths processing, outcompeting the steel and smelting sectors in the US and Europe, and leaving them dependent on China for the balance of refined supply in many key industrial inputs. This, in turn, has seen the US classify its mineral supply chain as a national security policy priority[1], rather than an issue that can be left to market forces.
The Outlook for Asset Allocators
In our view, this new environment is likely to elevate the value of emerging markets' generous mineral endowment and also give emerging economies more leverage to capture value. Thus, for asset allocators, emerging markets' prime position in key natural resources is yet another reason why increasing allocation to EM makes sense in the long term.
EM countries with mineral resources should benefit fiscally, and the roadmap to avoiding a 20th-century-style ‘resource curse'—through royalty streams and investing the proceeds via sovereign wealth funds—is now well established. We believe that, on balance, mineral resources are a tailwind for EM, and the deglobalized geopolitical landscape we are entering will only intensify that.
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