Gerardo Del Real,
Editor
Feb. 22, 2022
Last week, I visited Miami to speak with a company looking to revolutionize the electric boat industry.
I also just wanted to go to Miami.
After several meetings, presentations, and $25 vodka sodas I walked away reassured that electric vehicles and boats (pick anything that can be electrified) are here to stay.
Fast forward a few days… and we’re on the verge of another war and the human costs associated with that.
We’re also getting a real-time lesson in critical metals independence and how crucial it will be for nations to fast-track efforts.
Nickel and aluminum just hit multi-year highs.
LME-approved warehouse inventory has declined rapidly. Aluminum inventories are down to 835,000 tonnes from nearly two million tonnes in March 2021. And nickel stocks have dropped to 82,000 tonnes from approximately 260,000 tonnes in early 2021.
Our always fashionably late government has managed to recognize that depending on countries that may or may not (depending on the day of the week) want to see us succeed for the bulk of our critical metals needs might not be the most prudent of policy decisions.
This week, the White House announced a Pentagon plan to boost the stockpile of rare earth minerals, cobalt and lithium it manages so the U.S. government can reduce its long-term dependence on China.
You’ll note this is happening just as we’re potentially going to war with Russia (the writers in 2022 are getting creative).
And it comes nearly a year after U.S. President Joe Biden issued an executive order to study U.S. supply chain vulnerabilities (they said resiliency).
Seems they sorted out that converting its non-tactical vehicle fleet of nearly 200,000 vehicles might prove challenging without lithium.
The White House release had a number of interesting tidbits in it that include:
The Department of Defense’s Industrial Base Analysis and Sustainment program has awarded MP Materials (NYSE: MP) $35 million to separate and process heavy rare earth elements at its facility in Mountain Pass, California.
Go Chamath? Still canceled? Too soon. Never mind.
As part of the plan, Energy Secretary Jennifer Granholm will discuss the DOE’s $140 million demonstration project funded by the Bipartisan Infrastructure Law (BIL) to recover rare earth elements and critical minerals from coal ash and other mine waste, reducing the need for new mining.
She’ll learn that reducing new mining isn’t going to solve the problem but that’s another conversation for another day.
She will also discuss $3 billion in BIL funding to invest in refining battery materials such as lithium, cobalt, nickel, and graphite, and battery recycling facilities, creating good-paying clean energy manufacturing jobs.
The Department of Interior (DOI) also announced it has established an Interagency Working Group (IWG) that will lead an administration effort on legislative and regulatory reform of mine permitting and oversight (should be interesting).
The IWG also released a list of Biden-Harris administration fundamental principles for mining reform to promote responsible mining under strong social, environmental, and labor standards that avoid the historic injustice that too many mining operations have left behind.
The IWG will deliver recommendations to Congress by November.
I’ll be on the lookout for those recommendations.
These shortages, supply chain bottlenecks, and relying on countries not friendly to the U.S. or parts of Europe are not new.
I've been writing about them privately – and profiting handsomely – since 2010 and publicly since 2016.
It took a little longer for governments to come around and it’s funny/not funny it’s coming around just as it looks like we’re on the verge of another war that could lead to sanctions from both sides, which will directly affect the input costs of those materials we’re looking to secure.
I can’t control that but I can profit from it and the portfolio is positioned beautifully for it.
See the rare earth stocks and other trades I’m making now.
Let's get it,
Gerardo Del Real
Editor, Resource Stock Digest