Economy 101: Materials Sector — the Essential Link of the Economy
Understanding how the materials sector provides the raw goods for other industries
The economy is made up of 11 sectors.
These sectors are broad classifications of business activity that can include multiple industries. Each sector of the economy has its function. Materials sector, for example, is crucial for all other sectors of the economy, to provide raw materials for manufacturing, construction, and transportation. Without the logging, mining, chemical manufacturing and base and precious metals industries, the economy will not be able to produce goods, infrastructures and computers which make our lives seamless.
In this post, I will go in depth on what I learn about the materials sector, the different industries within this broad sector, and the nature of investing in this sector.
Logging, chemical production, mining, and more make up this sector of the economy.
What is the materials sector?
When you wrap a package, open a jar, or put on your watch — you’re using products made in the materials sector of the economy.
The materials sector is composed of the production and distribution of raw materials such as paper, plastic, glass, chemicals, metal, etc. These products are crucial for construction sites, farms, offices, and homes. Naturally, other sectors of the economy, such as utilities, real estate and consumer staples, rely heavily on the materials sector to operate.
The materials sector encompasses so many different industries and contributes to other sectors of the economy. Here’s a list of what makes up the sector:
Mining
Mining for minerals, metals, and other resources such as oil and coal is part of this sector. In 2020, the mining industry produced $362 billion in revenue in the U.S. and employed roughly 537,000 people. The three biggest mining companies in the U.S. by market capitalization are Newmont Mining Corporation (NEM)($10.5 billion), Peabody Energy Corporation (BTU) ($4.2 billion), and Arch Resources Inc. (ARCH)($2.1 billion).
