Can Trump's critical mineral strategy work?

EPISODE 3. Anthony Milewski and Christian Purefoy talk US President Trump's critical mineral strategy, can it work, tensions with automakers, and environmental concerns over processing.

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Transcript

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All right, everyone, welcome. Third edition, or third episode. Boom, Bust and BS. We're back Look, you know, I was off I had spring break with the kids and I was skiing. And, you know, if you're off the desk for more than a couple of days, Trump Trump kind of upends everything, doesn't he. Can’t take a weekend’s break at the moment. and it's always on a Friday. It's on a Friday. Yeah, I look, these tariffs are crazy, you know, 25% on auto, but like, step away from auto and just look at what's happening he’s upending the copper markets. You know, uranium is a critical mineral now or going to be and he's really kind of just disrupting the whole ecosystem of minerals globally. Yeah, it's going to be interesting to see how this all ties together. Okay. Let's I want to get this right for everyone and for ourselves, because that was the big executive order that he signed basically the critical minerals executive order boosting domestic critical mineral production. And it was expediting permitting industry input, Mining Act clarification. It was all based around, you know, Cold War powers to ramp up mineral production in the US. I mean, well, actually, first of all, I mean, just to put this in context, America is 100% dependent, import reliant on 12 of the 50 critical minerals. And I mean, you know, just basically a hell of a lot more on 90% Can this work? The thing about the States is, especially for those of the people who are watching or listening. There is this federal system and then there's a state by state system. And so it's one thing for Trump to come out and say, well, we're going to do this and we're going to do that, and that's relevant to federal lands. But, you know, I think it's a little bit more complicated if it's not on federal land. And so I think that, you know, with the BLM and, you know, you know, certain aspects of government property or however you look at across the states, I think you could be extremely effective. I wonder how effective he can be. You know, in the case where it's a states issue, you know, it's a state permitting issue or a state regulatory issue. And so, you know, I think it will be interesting to see if we get there or not. And we'll probably have to have some sort of a crisis. But, you know, for instance, there are copper mines in California and there's a lithium and a uranium prospect in Oregon in places you don't think of as mining jurisdictions, you know, would Trump be willing to lean on the state and say, hey, we're not going to fund this thing or that thing if you don't push forward with permitting and and so I think that's where it gets interesting, because on the federal lands, you know, that's pretty straightforward. and I think he can be effective. But I don't know what the federal government, what levers they have to push forward projects where it's not a federal issue at all. It's related to like the states. Is it an emergency? I mean, we just listed about how, you know, how import reliant America is, but also China is just starting to export restrictions on tungsten gallium, germanium, antimony. Well, look, we are entering the moment where, you know, so people are calling minor metals are basically all critical minerals, but then critical minerals also like encompasses I mean, it's almost everything like it's kind of this crazy thing. But if we step back for a second, let's talk about minor metals as a subset of critical minerals, and that's kind of the tungsten and the gallium. I mean, these things could just roof, you know, you saw you saw what happened to antimony. Tungsten went for like $6 to what’s it at now$44, you know, since January mind you. So I think you're going to see these critical minerals absolutely roof and it's not going to happen together. So it kind of opens up some interesting moments for investors to make money. But, you know, one of the results should be from Trump's announcement is that US based assets get funded and it may or may not help them through the permitting sense of this like states issues. You know, but what I think it does, it that it cashes them up for the fight. And you know I can think of examples there's this little company US Copper it's in northeastern California historically operated copper mine. You know, it's big. It's not high grade by any stretch, but it's a big project. But it's in California. And I think the thing's trading at $0.06. It's like this would somewhere else be a copper mine. And, you know, will it will they get cashed up for the fight? And I think there's 50 of these or 20 of these for nickel. there's some, you know, kind of in the northern part of the U.S. for nickel. And so maybe that's the big benefit of what Trump does here is. He lets these companies re-rate, you know,$0.06 goes to a dollar or $0.50 or whatever. it goes to, these companies get cashed up and then they're able to move through that process on the state side. which might be more protracted California, is a great example of it because, I mean, if you're in if you're in a red state, in theory, they'd be more happy to start funding some of these mines. But California is way over on the other end of the scale, governance-wise. The left... Well, California's actually a unique case. So on some states it's like everything the permitting that is done on a statewide basis. In California, actually, the counties which for our listeners, you know, you have the state as you have the United States, and then from the United States, you then have a state. And then within the state you have counties and counties make up the state. So it's kind of a subset of the state. So in California, as opposed to say, you know, Nevada, you know, that decision is being made largely on a county level. So if you take this example and there there are other examples. But the example, this copper project I was talking about, you know, it's in a fairly red county. And so, you know, you would think that a project like that would move through the county and then up to the state level. But if you were down in Los Angeles or something, you know, it's hard to envision, you know, like Governor Moonbeam there, like it's hard to envision those things making it out. But, you know, it all comes back to the most important point, which is I think what Trump has really done is, you know, created an environment where a lot of projects are going to, one, rerate and then two on the back of that rerating, get funding for development for a development cycle which the US hasn't seen in maybe 50 years. Right? I mean, this is a cycle that hasn't happened in decades. No one, you know, I don't think any of us really remember that last cycle. And it's coming at a time when I mean, we chatted about this before, but when the Treasury Secretary is talking about trying to take money out of tech and all these other places and pump them into, you know, things like mining. There's this thing about everyone's memory and, you know, NIMBY, right? Not in my backyard. A couple summers ago, I floated the middle fork of the salmon river in Idaho. Do I really think a mine will get permitted, like just the economic benefit to that area from the middle fork of the Salmon River probably far exceeds any mine being built where, you know, potentially there could be an accident at a middle fork. I was skiing in the Wasatch in the past week and, you know, I don't know what Utah's what percentage of Utah's economy is related to snow sports, but I suspect it's very high. So, you know, there are going to be these challenges around. You know, it's one thing for Trump once again to put this forward. But, you know, does anyone really want to mine near Jackson Hole? You know, probably not. Does anyone want a mine, you know, near Park City? I mean, Park City was a mine a hundred years ago or something. Maybe more. Maybe it's too I don't know how long ago it was, right. But so I think there are challenges and headwinds that will have to be worked out. Certainly certain jurisdictions like Wyoming overall and Nevada and New Mexico, you know, those are probably going to be going to be pushing on an open door. But in some of these other states, like in Idaho, California, where there are deposits, which are economic at the current prices and which could make sense, you know, it'll be interesting to see what happens there. And then we've got price. Let's not forget Alaska, right? I mean, when I look at Bristol Bay, I, you know, like in as much as I'm a mining guy, like some mines shouldn't be built. And I think that has to be, you know, doesn't matter where you sit that spectrum of left, right, center, you know, some of these mines, like if there's a potential to destroy one of the last great salmon sanctuaries effectively, you know, that might, in my view, probably shouldn't be built. So, you know, it's not like this blanket thing we're going to build every mine. Still probably on a case by case, jurisdiction by jurisdiction basis, Judging from those fishing rods behind you're a little biased on that. I'm catch and release though. So then we've got price, right? So he's talking about pumping investment, But if they cannot bring the price down or the price up for these mines, well, either the price down for the mines or the price up for the minerals against China who is often, for example, nickel swamping the market, bringing the price down. That's going to be difficult. And he's talking you know, he signed another executive order with copper. We're waiting for the Commerce Department to come out with are they going to tariff that? But the problem is the people in the US government, like the ones I've talked to, they're not professionals, not commodity professionals. They might be actual professionals, but, you know, they’re politicians, appointees, people who've been working in the government. And I just I've rarely, if ever, met someone who was a Glencore trader who works at and, for the audience, Glencore is one of the big trading houses, but it just doesn't happen. And so I would say this in the immediate term, if the US government needed tungsten, antimony, whatever that mineral was, there's a price that will clear the market. So so it's, it's not like they're not going to get it at some price. And so, you know, that stockpiling thing which happened during the Cold War like that's important in the immediate term. But if people inside the US government or if people in general have this view that we're now in this post World War two era where the world is going to realign around new superpowers and readjust itself, which kind of is what's happening with Trump and Europe and what have you. Then the US government actually has to look itself in the mirror and secure supply, and that's going to extend beyond the US. I'm sorry, they're going to have to make up with Canada. You're going to need nickel in Canada, uranium in Canada, like, you know, some of these other rare earths in Canada and potentially Africa. But that's just the numbers don't work any other way. And that kind of goes to the the tension of the the cars, the automakers, because the automakers, they in America. Right. Tesla, General Motors, they need to make cheap cars to compete or you put up the tariffs. But even if you put up car tariffs, which is what Trump is doing, then the cars are still more expensive in America. You need to bring the battery price down. To do that, you need cheap minerals. And one of the ways, you know, Biden was trying to do this and you just mentioned it, you know, you got to make friends with Canada. You got to make friends with other places who have the mines, can bring it on pretty quickly and reasonably cheaply. But also nickel with Indonesia, you know, I mean, GM is building it's investing quite heavily there. So, when it comes to the crunch, is America going to say, okay, free trade agreement countries, you're all in or is Trump's, you know, America First going to work? It's going to be interesting how that tension plays out. Yeah, I don't know. I don't really I mean, NAFTA, if you take NAFTA, for instance, in large part, NAFTA actually was almost intentionally pushing work into Mexico, for instance. And like, there's some really nuanced laws, like what does Made in America actually mean? So like, there's these funny things like, you know, the whole thing gets built somewhere else. But if you assemble, assemble it in America, they send it in a box that someone makes in America. So I don't know. And also, does America really want to have an industrial base? It's all fine and well to talk about it, but is there really a labor force to support large scale production of automobiles, especially when automobiles are probably increasingly becoming more automated? You know, what's robotics and what have you. So I don't actually know. I you know, I thought I think about it a lot. I don't you know, I do think we need to broaden our alliance. I mean, Canada as a 51st state is nonsense. But I think he might be serious about Greenland, you know, I mean, there's, what, a quarter of a million people in Greenland. And if if he goes to Greenland and says, you know, have a referendum and by the way, everyone alive and born in Greenland never pays income tax, I mean, it's nothing like you would get that vote. So I, I don't know. It's going to be interesting to see what shakes out, And it's going to take time because these mines are going to take time to build. They're going to take a decade. And by the way, the people don't get it, when you build a mine, even once it closes, forget the capital, forget all the nonsense, the noise, the permitting. It's actually not easy to build a mine. You know, you got to get that processing right. And that ramp up of the mine in some cases can take years. So, you know, even if everything is perfect, here's your money, here's a permit, here's everything. Let's go. Like you're not mining in large scale next year. That could take years to actually come to fruition. And more than mining, it’s the processing plants. Yeah, that's that's like a lot of it. Look at antimony and gallium and germanium and like what we're really talking about here is the refining processing, you know, where 96% is in China. And we've completely it's really that was a decision based on exporting pollution. Refining was relatively not so expensive. I mean you can toll it. There's things you can do. But that was a decision to export pollution to China. And it's dirty. It just is. And once again, you got to ask people in America somewhere to to suck it up and take the pollution on. And I don't know, like, we'll see. There is a moment here, though, with technology to try and clean some of this up. So, yes, the last 20 years we've exported, you know, environmental problems, but DLE technology with lithium for example. In theory, this is a much cheaper, faster, cleaner method. It's still untested. I'm not aware of it working at any large scale yet. You know. But if it does if it does, it could change everything. But it's still, dirty mining is, you know, you can make it less dirty, you can make it less of this and that, but you're literally digging a hole in the ground, cracking rocks together, pouring acid on it, exaggerating, but like the nature of the thing is, you know, it's not spic and span. And by the way, that's just mining. Forget let's talk about refining for a minute. Right. So, yeah. All right. But the good news is, if you're an investor in commodities, this is a moment for you is the moment, right. So a lot of things are going to get going. It is actually kind of an exciting time. So I think that's where we're at. Yeah, I think podcasts are getting the habit of starting incredibly positive, talking ourselves into a hole, and climbing back out. It is incredibly exciting. I mean, there's so much moving You've got Europe trying to source their supply chains. You've got America, obviously, critical minerals, executive orders. China doing its thing. I mean, it's all - everything is to play for. So now Trump's executive order critical Minerals Boom bust or B.S. Boom. Let's go for it. Cheers Anthony, this is a great one. And thanks everyone. Don’t forget to subscribe, we'll catch up with you next time. All right. Talks soon.