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Mining
The good ole US of A is starting to throw its financial muscle behind critical minerals with one eye on something it really doesn’t like – China’s dominance in the battery metals supply chain.
While Western economies talk a big game about the energy transition, they are uncomfortably wedded to the dominance of China as a manufacturing powerhouse in the industry.
That comes with two broad concerns.
Like with Russian energy supplies and its invasion of Ukraine, the level of control of the supply chain by a belligerent competing power could cause major supply shocks in the event of tensions between the White House and Beijing.
Secondly, there are concerns about the ESG standards of Chinese supply. Chinese coal production is on track to grow at a rate more than double Russia’s total exports this year.
Now the US wants to make it easier for US and Australian investors to finance critical minerals projects in their respective countries.
The thought bubble came out of talks between Federal Trade Minister Dan Tehan and US counterpart Gina Raimondo in the States this week, where critical minerals was put on the table ahead of the “Inaugural Strategic Economic Dialogue”.
It included a delegation of CEOs of critical minerals and rare earths businesses at home and in the USA.
“This delegation will help deepen the ties between Australian critical minerals businesses, potential investors, and the US government,” Tehan said.
“Our Government is working to help facilitate partnerships between Australian critical mineral project proponents and potential sources of offtake and investment.
“As global demand grows for critical minerals for use in rechargeable batteries, electronic devices and advanced technologies, Australia is well positioned to become a trusted supplier of critical minerals to the US, and the world.”
According to the US Department of Commerce the energy transition is looking to secure a “resilient and diversified supply” of materials for wind turbines, EV chargers, batteries, solar panels and semiconductors.
Aussie resources are on the table, with the countries looking at financing mechanisms to support private investment between the two nations following the industry roundtable.
“They noted the executive-level roundtable on critical minerals held on March 30 highlighted the commercial potential for both Australian and U.S. industries and underscored the need to strengthen capabilities across all segments of the supply chain, including extraction and downstream processing,” the DOC said in a press statement.
“Australia and the United States will look at how their respective financing mechanisms could be better coordinated and leveraged to support private investment in supply chains.”
A number of Australian companies are looking to open supply chains for critical minerals in America, with some hitting snags including opposition from local communities.
Among the large Australian lithium companies operating in the States are Ioneer (ASX:INR) and Piedmont Lithium (ASX:PLL), both of whom are positioning themselves as suppliers into a local lithium supply chain.
Lynas (ASX:LYC), the largest rare earths producer outside of China, which operates in WA’s Goldfields and Malaysia, has also been working with the US Department of Defense on the establishment of a rare earths plant in Hondo, Texas.
The big miners were driven higher, sending the materials sector soaring by 1.77% this morning after Dalian futures hit their highest level in 7 months yesterday and drove higher this morning.
Dalian iron ore for September is fetching US$141.79/t (900 Yuan), with spot prices for benchmark 62% Fe fines rising 1.2% to just under US$153/t yesterday according to Fastmarkets MB.
Singapore’s May contract is even more bullish, with traders offering US$160.65/t this morning amid expectations China will see through its Covid lockdowns and stimulate the economy later in the year.
BHP (ASX:BHP) was up 2.82% today to $51.99. Up 22.72% YTD, the world’s biggest miner is closing in on all time highs of $54.55 it hit amid last year’s iron ore boom.
Ramelius Resources (ASX:RMS) has been one of the most acquisitive mid-tier gold miners in recent years.
Having added the Edna May gold mine off Evolution to its 250,000-odd ounce a year portfolio a couple years ago, it’s taken juniors Explaurum and Apollo Consolidated off the market to snare their Tampia and Rebecca gold projects in WA.
The Marda gold mine from the administrators of Southern Cross Goldfields and the high Penny gold mine via the takeover of Spectrum Metals was another one.
That’s a lot of work for a few short years, but the company remains debt-free and powder dry.
Today it announced a new $100 million debt facility “for general corporate purposes” with a consortium consisting of Commbank, BNP Paribas and NAB.
The facilities remain undrawn with a two-year term and one-year option on top of that. Could another junior mine-buy or larger deal be on the way?
Curiously Musgrave Minerals (ASX:MGV), a fast moving Mid West explorer which has been mooted as a potential takeover target for a host of big names including Ramelius, has muscled in on RMS territory.
The Rob Waugh led gold junior has acquired the Mount Magnet South project on RMS’ doorstep from a private vendor, comprising 294km2 of ground immediately south of the Mt Magnet gold mine and 40km from MGV’s Cue gold project.
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