While the world worries about a trade war, America and Australia push for a peace treaty of potentially epic proportions over “critical minerals”
While the world waits, with bated breath, to see who will strike next in what many have dubbed a “trade war” between the United States and a host of other countries, most notably China, members of the EU, and its NAFTA partners, Canada and Mexico, and while investors in the “electric revolution” (electric vehicles, battery metals, energy storage, etc.) appear to be obsessed with where lithium and cobalt supplies are coming from, how soon, and in what amounts, one major development, which should have every such investor’s full attention, has seemingly flown completely beneath their radar.
That development is the action that the President of the United States, Donald Trump, will soon be taking on recommendations he will be receiving from the U.S. Department of the Interior, likely before the end of August, with regards to “critical minerals”, of which the United States has identified 35, including not only the aforementioned investor favorites, lithium and cobalt, but a slew of other metals needed for lithium-ion batteries and military hardware as well, such as aluminum (bauxite), natural graphite, and manganese.
The list of minerals/metals critical to the United States was finalized on March 16, 2018, representing one of the first actions the U.S. Department of the Interior was instructed to take in response to an Executive Order signed by Trump on December 20, 2017, entitled Presidential Executive Order on a Federal Strategy to Ensure Secure and Reliable Supplies of Critical Minerals. Upon the lists finalization, the next step was for the Secretary of the Interior to, within 180 days of the date of the lists publication, submit a report to the President, to include:
- a strategy to reduce the United States’ reliance on critical minerals
- an assessment of progress toward developing critical minerals recycling and reprocessing technologies, and technological alternatives to critical minerals
- options for accessing and developing critical minerals through investment and trade with our allies and partners
- a plan to improve the topographic, geologic, and geophysical mapping of the United States and make the resulting data and metadata electronically accessible, to the extent permitted by law and subject to appropriate limitations for purposes of privacy and security, to support private sector mineral exploration of critical minerals, and
- recommendations to streamline permitting and review processes related to developing leases; enhancing access to critical mineral resources; and increasing discovery, production, and domestic refining of critical minerals.
Of the greatest interest to investors, for the purposes of this article, is the indication that Trump is specifically seeking “options for accessing and developing critical minerals through investment and trade with [United States] allies and partners”, because, if recent news and political developments are any indicator, and I believe they are, the two allies likeliest to engage in such trade and investments-related activity with the U.S. are the friendly jurisdictions of Australia and Canada, which just so happen to also be chock full of the critical minerals America needs, as well as the mining and exploration experience required to teach America how to extract its own domestically.
Now, while there are admittedly a lot of kinks left to be worked out, in terms of a potential trade deal to replace NAFTA, between the United States and Canada, it was just days ago that the Trump Administration officially exempted Australia (and Argentina) from U.S. tariffs on steel and aluminum, with Trump having previously stated that Australian Prime Minister Malcom Turnbull is “committed to having a very fair and reciprocal military and trade relationship” with the U.S. and that “[The U.S. has] a very close relationship with Australia. We have a trade surplus with Australia. Great country, long-term partner. We’ll be doing something with them. We’ll be doing something with some other countries.”
Assuming that NAFTA negotiations work out the way Trump would like, we could very well see Canada obtaining similar tariff exemptions, but in the meantime, it is quite clear that the pathway to American-Australian prosperity is being paved with an economic peace treaty of potentially epic proportions.
Consider this: In addition to the carve-outs that Turnbull and his people have negotiated with the Trump Administration, many Australian mining and exploration companies, not content to take a “wait to see” approach to what Trump has in store for them in the neat future, have already set up shop within the continental United States, in the hopes of exploiting the country’s abundance of natural resources to their own benefit and that of others, including the United States itself, which is desperate to build its own critical minerals supply chain after years of dependence on its financial frenemies, most notably China.
First, for example, we have Magnis Resources (ASX: MNS, US OTC: URNXF, FRA: U1P), based out of Sydney, which, in addition to owning a graphite mine in Tanzania, is a one-third owner of Imperium3, a consortium actively engaged in setting up a lithium-ion battery gigafactory in New York state, as well as two others in Australia and Germany.
Second, we have Piedmont Lithium (ASX: PLL, NASDAQ: PLLL, FRA: PL4), based out of Perth, which is working to consolidate privately-owned land, located within North Carolina’s historic “tin-spodumene belt”, to bring an area that was once one of the world’s greatest suppliers of hard-rock lithium back to life, in the hopes of selling its product to the likes of its Carolinian neighbors, Albemarle and FMC (which still maintain lithium chemical plants a few kilometers away), American automakers, such as General Motors, Ford, and Tesla, or electronics giant Apple.
Third, we have American Pacific Borate & Lithium (ASX: ABR), based out of Perth, which is developing its flagship Fort Cady project in Southern California, which it believes will become a significant supplier of not only lithium but also borate (with gypsum as a by-product, to be sold into the Californian agricultural market), as well as an early-stage project in Nevada which is prospective for both lithium and borate.
Lastly, we have Global Geoscience (ASX: GSC), based out of Sydney, which is seeking to extract lithium from a very unique lithium-boron deposit at Rhyolite Ridge in Nevada, which is unlike nearby brine deposits exploited by Albemarle or clay-based deposits being looked at by the likes of Canadian explorers Lithium Americas (TSX: LAC, NYSE: LAC) and Pure Energy Minerals (TSX: PE, US OTC: PEMIF, FRA: AHG1).
These companies are, of course, but a few of the many from “the land down under” and “the great, white north” that are looking to tap into the as-yet-untapped potential of the United States. Others, mostly from Canada, include eCobalt Solutions (TSX: ECS, US OTC: ECSIF) and First Cobalt (ASX: FCC, TSX: FCC, US OTC: FTSSF, FRA/BER: 18P), which are after cobalt in Idaho, Nevada Copper (TSX: NCU, US OTC: NEVDF, FRA/MUN: ZYT) and Excelsior Mining (TSX: MIN, US OTC: EXMGF, FRA: 3XS), which are seeking copper in Nevada and Arizona, respectfully, Standard Lithium (TSX: SLL, US OTC: STLHF, FRA/BER: S5L), which is on the hunt for lithium brine in both California and Arkansas, and MGX Minerals (CSE: XMG, US OTC: MGXMF, FRA/BER/MUN: 1MG), which is trying to extract lithium brine from hard-to-reach places in Utah, using specialized extraction technology.
With the above in mind, and with a very good idea of what we can expect from an “America First”, populist President who wants nothing more than for his country to stand on its own two feet, independent of potentially hostile trade partners for in the event of war, investors in the United States, Canada, and Australia would be wise to pay very close attention to what is coming down the American political pipe this summer, by way of Trump’s soon-to-be-received “critical minerals” recommendations, because if the last year and a half have taught us anything, it’s that Trump will act on these recommendations decisively, and it will be to the benefit of all three countries and likely every company named above.
Disclosure: I am long URNXF, ECSIF, NEVDF, and MGXMF and am currently in discussions with Standard Lithium to potentially work with them as an independent consultant.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from/through New Energy Narrative, which I am the founder and owner of). I have no business relationship with any company whose stock is mentioned in this article, other than the aforementioned Standard Lithium.
Please note: This article covers one or more stocks trading at less than US $1 per share and/or with less than a US $100 million market cap. Please be aware of the risks associated with these stocks.
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