Critical minerals: China and Trump

China is the world’s dominant supplier of critical metals, but the US is fighting back. We asked experts at this year’s mining conference in Cape Town how China built its position, how it operates and whether US President Donald Trump’s aggressive policy rollout can turn the tide.

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Ian Stalker, executive chair, Bradda Head Lithium Ltd Ordinary Shares (LSE:BHL): China in the commodities market, irrespective of whether it was lithium, copper or uranium, decided that it wanted to have its own supply. What they did with lithium is they have their own supply, but their own supply is not as rich or strong or as efficient as buying it from Argentina or buying it from wherever, Africa, for example, where we are now.

But that has meant that America has been choked off in its own supply, and it doesn’t like that feeling, you can hear it through the various policies that we hear religiously. They don’t like that dependency on somebody else. The government of America has said that we need to be able to be self-sufficient in all commodities. And there’s this - you’ve probably seen in the news - $12 billion (£9 billion) critical metals fund that’s put together. So, it’s not just lithium, it’s whatever you want, it’s tungsten,  it’s antimony,  it’s whatever.

Charles Bray, chair, Aterian (LSE:ATN): The Chinese recognised before the rest of the world that these supplies, which are of critical minerals, could be secured locally. And secured in a way where the value additions, so in other words, taking a ton of coltan ore is great and it’s good for Rwanda. They like to sell it, they get taxes and royalties on it, and the people earn from mining it.

The Chinese recognise that once you have that ton of supply, if you turn it into ingots, there’s a natural increase in value. They were able to secure the value addition in China. So, in terms of establishing investing in refineries, investing in refineries that could process ore that other places couldn’t. They then were able to lock that up and provide those materials at a relatively competitive price to the rest of the world, and naturally we went to the lowest-priced item.

I buy a number of Chinese items every single day. And generally speaking, they’re of good quality and I’m happy because I don’t have to pay 20% more somewhere else. The Western nations took that as an invitation to rely on China’s ability to provide those materials, as opposed to looking at it as a potential threat. And so now that rebalancing act is happening and President Trump has recognised that we need to have value addition outside of China.

Dennis Edmonds, CEO, Kazera Global (LSE:KZG): China at the moment is by far the biggest buyer of heavy mineral sands. The Chinese have processing plants, the Chinese have the infrastructure and they have the willingness to do it. It would be interesting to see what happens with America and whether America’s ambition to become self-sufficient means that they will actually take it over. They are one of the countries that do use titanium dioxide in foods. So, there is a possibility that the Americans would see advantages in producing to a much further extent their own titanium dioxide.

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John Meyer, partner and mining analyst, SP Angel: Well, Trump has thrown a lot of issues up in the air and he loves to see how it all falls. Yes, global supply chains. We saw China was already restricting supply to the West, and I think the conflict between Trump and China has just enhanced their resolve to squeeze the Western world, or squeeze anything that’s non-China, in terms of supply availability.

I think they were going to do it anyway because their policy and their strategy always was to make things for China, not to subsidise materials for the rest of the world.

Ron Heeks, managing director, Larvotto Resources Ltd Ordinary Shares (ASX:LRV): What happened with supply there and what really started the whole thing was China stopped antimony exports out of China. That’s always a thing to annoy the Americans, that’s the ongoing game, but fundamentally they want it all.

So they didn’t want anything that was going in to go out because it was going into solar panels and electronics and fire retardants and all that sort of stuff. So, yeah, don’t export it to them because we’re making life hard for ourselves. And if you control the world’s solar panel market, as they do, why would you let other people have a go?

So they stopped it and then the world realised that there was a problem. In America, they said that’s all right, we’ll just keep taking it out of our stockpiles and then realised that they didn’t have any stockpiles. They don’t produce antimony, they don’t mine it and they can’t refine it. So, it created a real panic.  

John Meyer: People create these supply/demand deficits or surpluses, usually they’re forecasting small surpluses, and then suddenly that surplus towards the end of the year becomes a deficit and everybody scrambles around for the metal.

We’re certainly seeing that in copper, in tungsten, big time in tungsten, partly because the Chinese are withholding it and partly because they’re saying well, hang on, we don’t want quite so many dirty, environmentally horrendous mines going, let’s be more careful about this. And also, China’s saying we want to make sure we’ve got production for the next 20, 30, 40 years. Why are we selling it all to the West when we’re going to need it at home?

Harry Anagnostaras-Adams, executive chair, KEFI Gold and Copper (LSE:KEFI): He has corrected an aberration. I mean, there are a lot of things that one can criticise President Trump for, but the very fundamental logic that he has brought to the fore is that resource security and supply chain management from Mother Earth through to consumer goods takes foresight.

One of the weaknesses of the US, if I may say, is the preoccupation with short-termism in investment cycles and stock market behaviour and the traders’ mentality is an anathema. If it takes you an average, globally, of 20 years from discovery to production, it’s quite a challenge to keep the share market happy during the 20-year period.

I think what President Trump has done, in his inimitable style, is to say in his own way that China has run rings around us for decades. They’ve looked far ahead, they’ve put their foot on resources far ahead, they dominate the world’s refining now, and they’ve put us in a vulnerable position.

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Chris Showalter, CEO, Lifezone Metals Ltd (NYSE:LZM): I think when it comes to supply chains, what we’ve seen is a really dramatic and aggressive policy roll-out from the US government. We’ve spent a lot of time in DC and what we’re seeing is new buckets of capital being made available, new joint ventures where the government is partnering with other private sector investment management firms.

The US government’s made a number of announcements recently, but the focus on critical metals has really jettisoned to the top of the administration’s list. I think you saw last week the announcement of the Strategic Mineral Reserve, the vault. So, you’re seeing a roll-out of an expanded set of not only funding alternatives but all these new products to support alternative supply chains.

They’re going metal by metal on the critical metals list and trying to see where they can come in and provide that funding and policy support and it’s not just funding, it’s active involvement from the State Department to really identify where they can support companies overseas.  

We’ve been a big beneficiary of that. We’ve got a lot of support from the US State Department, and that’s been a whole game changer in terms of the US government. They’ve really rolled out a very strong implementation to focus on supply chain security.

Robin Birchall, CEO, Serval Resources: So Biden and then the first Trump, because we were in Botswana in a critical mineral, and Botswana signed up for the critical mineral alliance with the United States, which Australia and Canada and a bunch of others signed up for, that was continued in a kind of normalised fashion under the Biden administration. So when you have the two largest markets, like almost a billion people between the two of them, the US and EU, deciding they need to do something about this and put some funds into it, it’s made a difference, right?

We’ve had the disruptive nature of the second Trump administration where allies are not sure if they’re allies anymore. That’s hard to see through what the impact of that is. But there’s no doubt that there is some continuity with the previous two, where they’re looking to deploy funds.

Andre Liebenberg, CEO, Yellow Cake Ordinary Shares (LSE:YCA): So, while supply is the issue for critical minerals in the US, his impact on the demand side has been enormous. The government announced this $80 billion deal with Westinghouse. They want to build 10 reactors. So, President Trump has gone from, kind of, ‘we’re going to build nuclear’ to ‘we’re going to quadruple nuclear’. He wants to go from 100 gigawatts to 400 gigawatts by 2050. That’s massive scale.

But it’s pushing the hyperscalers, the data-centre AI guys. This is a super-intelligence race between the US and China. China's building 36 reactors at the moment. The US needs power to supply these data centres. I think I saw in the Financial Times this week, the data-centre spend in the US is like $600 billion. He’s talking about having reactors under construction by the end of the decade. So, the executive orders supported all of that.

Anthony Viljoen, CEO, Andrada Mining Ltd Ordinary Shares (LSE:ATM): Africa is kind of the last battlefield for critical minerals. The geology in Africa is quite spectacular, very much underexplored. I think that the government’s policies are becoming a lot more favorable for long-term investments, especially Namibia, probably the best jurisdiction in Africa to invest in.

But what we are seeing though is that we are being courted by all the different powers that be. So, you’re seeing a real tug of war as you mentioned between China and the US.

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Rupert Verco, CEO, Cobra Resources Ordinary Shares (LSE:COBR): If you look at Australia, and we are very mineral rich, but a majority of our minerals for the last two decades have gone to China. China’s our biggest trading partner.

There’s a very different dynamic at present. There is a global shift in supply and demand happening, and if you look at Australia, we don’t have a magnet-producing industry. So, what does that mean for us? Well it means that we are developing material. The Australian government has put a lot of money into Iluka and Arafura for rarer separation.

We’re effectively doing that for our strategic partners, be it the US, Europe, the United Kingdom, who do have small but growing industries in rare-earth magnet production.

Chris Showalter: There have been a number of announcements. I think you saw the announcement where the US government is partnered with Orion and they announced a big deal in the DRC with Glencore (LSE:GLEN). So, these are the kind of things you’re seeing and, really, you have not seen these types of transactions supported by the US government recently. So, I think it’s evidence that they are rolling out and executing on this strategy.

Charles Bray: Over the longer term, mines will have to come online in places like Spain, Serbia, Germany, all of these countries. And that’s in particular because that’s the only way to truly, truly be independent. Because we don’t know, even though right now a lot of the raw materials are being sourced out of places like Africa and Latin America, you can’t tell, if those supplies will be secure.

I think there’s something a little bit different happening in the United States. Whereas in the US there’s been a push to allow mining on a more broader basis with less regulation, I think that’s going to happen more slowly in the EU, and I think that’s not necessarily a bad thing.

Emanuel Proenca, CEO, Savannah Resources (LSE:SAV): I think that having more actors in the system is a very good development for the system and I think that some of these actors will be very successful and will be able to compete and to out-compete some of the Chinese value-chain established players. We are already seeing that.

AMG Critical Materials NV (EURONEXT:AMG), a partner of Savannah, has built its refinery south of Berlin in Germany and it is already operating it. Keliber, in Finland, has a mine and a refinery and they are very close to starting operation, they are finalising construction. We are getting ready to build.

In Brazil, you started to have other projects, in the US, Tesla Inc (NASDAQ:TSLA) started its Corpus Christi refinery only a couple of weeks ago, and other projects are unfolding as we speak. In Portugal, I spoke about lithium in the refining space, about Topsoe in the cathode material space, about CALB Group Co Ltd Class H (SEHK:3931), the Chinese player, developing a large-scale battery plant, in Portugal.

When you put all these things together, you will see the development of a much stronger value chain and a much stronger industry that will serve the world in the coming five to 10 years, and I think that is very good news.

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John Meyer: When it comes to certain jurisdictions, it’s funny because Trump suddenly says, we want the rare earths in Greenland or in Ukraine. We know a little bit about the mining in Ukraine and we know quite a lot more about the mining in Greenland. We’ve never come across rare earths in Ukraine. In fact, they do iron ore, titanium in terms of ilmenite, and a few other things. There’s even the old gold mine.

Nobody knew anything about any rare earths in Ukraine and we don’t think it’s an issue. When it comes to Greenland, yes, there are a couple of rare earth deposits, but one is very low grade and one has got lots of thorium and uranium in it and the Greenlanders don’t want that.  

There will be more discoveries to be made and we hope that rare earths with less problems will be discovered, and I’m quite sure the Americans want to be there because more will be discovered as the ice retreats from the coastline. But it’s a difficult place for explorers. It’s got a short field season. It’s quite expensive to get around and it has very little infrastructure, not to mention people. I mean, 47,000 people in the entire country. So, that’s an issue.

Venezuela, it’s much more about oil, I think. We know about bauxite, we know about gold, and the Venezuelans stole everything, in effect, in their socialist way. We’ve not come across rare earths. I’m sure there will be some out there, but they are yet to be discovered.