Without these critical elements, the US economy isn’t safe.
As the global supply chains crumbled during the Covid pandemic, the US government realized that it needed to ensure the country had access to the “future” materials.
From uranium to lithium, cobalt, and other elements… the only way to ensure ample supply is to produce them at home or with reliable partners.
This logic is part of two megatrends that we’re seeing: the “green revolution” and “onshoring.”
Both are getting massive support from the US government… from billions of dollars lined up to be put into these projects… to new laws creating great conditions for the local US-based clean energy industry to take off.
Just recently, we have started seeing signs that this trend is accelerating.
Public Money Is Pouring Into “New Materials”
The need for the elements powering the economy of the future is vast. But there’s a problem. Most of them come from China, which has a strained relationship with the US.
Take rare earth elements (REEs). They are used in EV batteries, computers, lasers, and more.
The demand for them is exploding. Between now and 2040, the demand for them could increase by up to seven times.
And the market for the magnet REEs could swell from about $3 billion today to almost $16 billion by 2030.
About 90% of the global supply, according to the S&P, of REEs come from China.
Lithium? 50%. Cobalt? 70%.
The US government doesn’t think this is sustainable.
As a result, it’s stimulating domestic production.
Which is a boon for the mining companies focused on these and other “critical” elements.
From lithium miners to the companies developing REE deposits… it’s a good time to be in this sector.
For example, the US Department of Energy announced that it would spend $3 billion to invest in “green metals” such as lithium, nickel, and cobalt.
And the biggest news of all is that the US Mining Law of 1872, which is 150 years old this year, is under review now. The government wants to make it easier to produce green metals in the US and regulate mining so that it’s effectively aligned with the ESG megatrend.
Specifically, the regulations for cobalt, copper, and nickel projects could get a fresh boost. The current 1872 law makes permitting them a long and arduous endeavor.
Canadian Mining Companies Stand to Benefit, too
Canada has been a reliable supplier of more than a dozen critical materials to the US.
And in 2020, the two countries finalized the Canada–US Joint Action Plan on Critical Minerals Collaboration.
Canada’s Minister of Natural Resources said: “By finalizing the Canada–U.S. Joint Action Plan on Critical Minerals Collaboration, we are advancing secure access to the critical minerals that are key to our economic growth and security — including uranium and rare earth elements — while bolstering our competitiveness in global markets and creating jobs for Canadians. [emphasis ours—The Financial Star].”
This agreement, in our view, is going to be a game-changer for both countries’ critical-metals industries.
While the United States is working on improved legislation, Canadian uranium and rare-earth companies are ready to develop, produce, and ship their critical metals output to their northern neighbor.
This is what a lot of investors miss when they think about the ESG revolution in the United States. Canada has, in our opinion, all it takes to ensure that both countries have plentiful supplies of the elements critical for building the future economy.
Canadian mining juniors could be one of the most exciting investment opportunities of this decade, in our opinion.
The demand for their products is poised to surge as the “green revolution” unfolds… and, with the help of the US government’s policy favoring shorter supply chains, as well as its grants and law updates, we could be looking at a secular bull market in the North American mining equities, including those listed both in the US and Canada.
Thank you for your loyal readership,
The Financial Star team
