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A paradigm shift is underway in critical minerals.
For this to proceed, we are dipping into someone else’s playbook.
If you had told me in 2019 that the global landscape would transform this deeply, and fast, I’d have said “no way, Jose”.
Yet here we are.
Among these new strategies, price floors are high up, but direct investments, loans and other types of mixed instruments are emerging, coming straight from the government.
Our instincts may say that pushing these, we’re advocating for anything but ‘free markets’ here, but the reality is that China’s dominance is just too entrenched to be solved with traditional tactics.
Pragmatism is needed.
A certain level of interventionism seems required.
Even if, at some level, it makes us feel a tad worried.
Last week, Burgum, the US Secretary of the Interior, said the price floors supported by the minerals club would attract long-term capital.
“The private sector can get involved and make investments in mining and refining, knowing there’s going to be a market and they don’t have to worry about the bottom falling out,” Burgum said.
This lowers risk and helps get more investors onboard. While keeping them invested for longer.
Over the last 6-8 months, the US has taken positions in $MP $LAC $USAR which already changed the face of the space. More of these deals are coming, globally.
Also last week, the US announced collaboration with the EU, Japan and Mexico on critical minerals strategies as part of its efforts to weaken China’s dominance in the market for materials used in defence and high-tech industries.
Under these action plans, they will coordinate trade policies and mechanisms, such as border-adjusted price floors, that can mitigate critical mineral supply chain vulnerabilities.
“Consistent investment is nearly impossible, and it will stay that way so long as prices are erratic and unpredictable,” Vance added.
Price floors are here. REEs, absolutely, but we need to discuss lithium seriously as well.
This builds on last Monday’s announcement of plans for a nearly $12 billion critical minerals stockpile and intensified efforts to bolster the US supply chain. Australia, EU and Canada already announced their own stockpiles; some have a general focus, others centred around antimony, gallium and rare earth elements.
But we have a choice, and speed plays a powerful role.
Let’s put a pin on this for a sec and talk about what we’re paying attention to this week:
Macro snippets
- Volatility galore: Silver’s wild swings continue as traders move out and take profits. Estimates, though, show strength ahead both in gold and silver.
- Economic calendar: This week, US releases retail sales, jobs and inflation; Brazilian PPI; Australia’s NAB business confidence. Chile’s copper output fell 4.7% in December, a 5-month streak (as the metal reaches new highs, and Chinese copper plants are buying any dip). Aussie reporting season takes flight.
- Regulatory: In addition to “Project Vault’, US-Argentina agreed to ease restrictions on each other’s goods which is set to incentivise investments in critical mineral projects.
Meanwhile…
These companies are making bold moves.
Deals, capital raising and IPOs
- Cornish Metals receives $225M funding interest from US EXIM
- Rio Tinto, Glencore scrap $260B mining mega-merger
- Energy Fuels to buy Australian Strategic Materials in a $300M deal
*If you’re viewing this via email, click on the date to view the full tweet and any available sources.
- MB Gold $MBG is set to be listed on ASX via an A$9M raise; their focus is on gold in Australia. Ventnor Securities Pty Ltd is Lead Manager, and the price on listing will be A$0.20/share.
- Buffalo Potash Corp $BUFF and One Bullion $OBUL are now listed on TSXV.
Typically, we expect a lift in targets and weakness in acquirers, and often, peers to targets get extra love. For IPOs, we keep an eye on listing day/week, as big swings may point to opportunities.
News, rating updates and research reports
- ATEX Resources Inc. $ATX announces additional high-grade assays from the B2B zone, including 186 meters of 2.13% CuEq and higher >> read
- ST GEORGE MINING LIMITED $SGQ further high-grade results at its Brazilian rare earths and niobium project, up to 22.42% TREO; appoints US government adviser to advance engagement with US Government and US private enterprises >> read
- Agnico Eagle Mines Limited $AEM to divest Barsele project in Sweden, lifting ownership in Goldsky Resources $GSKR to 32.5% on completion >> read
- McEwen Mining Inc. $MUX to acquire all issued and outstanding shares of Golden Lake >> read
- The new demand catalyst for lithium >> watch our review
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Upcoming, discussions and deal flow
- Currently seeking assets in Australia, US/Canada and most of Latin America, especially gold, copper and silver. If you hold assets and are seeking a transaction, you can submit here.
- Every week, we review assets and technologies for acquisition and investment. See some examples in our deal flow view.
Now, back to the choice we have: In a de-globalised economy, regional collaboration with like-minded nations is not only part of the play, but it’s also essential.
It’s a new world.
And here’s the thing: The way governments and industry interact is evolving.
Sure, we could do nothing and wait for things to improve over a decade or two. We may get there.
Or we put the pedal to the metal to swiftly bring about this change and see meaningful outcomes much sooner.
I say let’s drive fast.
Where do you stand on this one? Would love to hear.
And that’s it for today.
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Sources: Canaccord research, Bloomberg, Reuters, Mining.com, TradingView, ASX, TMX, NASDAQ, LSE and SRC research. Figures shown in US dollars unless clarified.
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