June 07, 2023

Biden’s Address to the Canadian Parliament Sends Strong Messages on Geopolitical Relationships and Critical Minerals Development

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Biden's Address to the Canadian Parliament Sends Strong Messages on Geopolitical Relationships and Critical Minerals Development

Timing might not be everything but it certainly matters in the world of geopolitical messaging. President Joe Biden sent several important messages on March 24 when he addressed the assembled Canadian Parliament, together with Canadian PM Trudeau.

And what messages! The political and visual juxtaposition of Biden and Trudeau with body language telegraphing genuine liking and appreciation, versus Russian President Putin and Chinese President Xi, telegraphing stiff formality and duty. Laugher and spontaneous applause in Canada, versus choreographed expressions of dutiful support in Russia.

US and Canadian “Shared Values”

Substantive declarations of mutual support for shared values – the phrase ‘shared values’ repeated several times for emphasis. One particularly evocative phrase: “To relentlessly pursue the possibilities of tomorrow.” Among the shared values called out by President Biden: climate action, better lives for working people, and support for Ukrainian identity, self-governance, and democracy. Whereas in Russia, no discussion of shared values or broad policy objectives, with Xi once again maintaining a stolid silence on Ukraine.

Biden maintained an emphasis on the US-Canada partnership, citing several examples, including that the US Inflation Reduction Act provisions include tax credits for Americans buying electric vehicles assembled in Canada (an example of the ‘national provisions’ in that legislation). Along the same line, he noted the coordination on EV standards extending to charging stations, to ensure seamless cross-border access. This matters because, in the past, countries have used different electric outlets as a way to exclude others from utilizing the systems without in some way paying an extra charge.

North American Supply Chain for Critical Minerals Development

Perhaps most notably, President Biden’s important, albeit brief, reference to what could be cast as mutual support for the ongoing effort to develop a cohesive North American supply chain for critical minerals development. Noting Canada’s vast natural resources, including major critical materials deposits, Biden opened the coffers of the US Government to Canadian mining companies, putting potentially millions in play under the authorities of the Defense Production Act to accelerate the development of new mines and materials processing. As is sometimes the case with Biden’s statements there is some ambiguity: some Canadians interpreted Biden as saying that the materials should be mined in Canada but would be processed (or value-added) in the US.

What about that? Well, it seems like a justifiable interpretation given US Government’s spending patterns to date. Most of the monies released in the US so far have focused sharply on developing crucial processing capabilities for rare earths. Australia’s Lynas is building both light and heavy processors in Texas, while the sole US rare earth miner currently operating, MP Materials, also received financial assistance from the US Government to build its processing facility. The emphasis on processing is laudable, as MP Materials’ current output still is being sent to China for processing, underscoring an important supply chain vulnerability.

Critical Minerals Mining in the US

On the other hand, there has been a noticeable lack of enthusiasm for providing funding to help jump-start new critical materials mines in the US. Without in any way diminishing the scope and value of Canada’s rare earth deposits, and with all respect Mr. President, the US also has some very significant untapped critical materials deposits which are crucial to ensuring US national security and economic transformation.

It is simply unrealistic to suppose that the US is somehow going to be able to source everything needed for a national stockpile (which DoD already is mandated to develop) and growing key industries such as EVs and semiconductors (specifically mentioned by Biden) without new primary mines in the US.

Major Hurdles – Capital and Permitting

There are two major hurdles to achieving new primary critical materials mines in the US: access to capital and permitting. Official US Government seed funding encourages private capital to invest in early-stage miners, effectively accelerating the actual build-out of mines.

Most importantly, however, the US needs to address its broken permitting system. When there are no reasonable limits on how long the array of government agencies can take to consider whether to permit mine development at various stages, there is no certainty for either investors or miners that a mine ever can be built. It’s that simple. There are ways to fix this problem without (as critics claim) gutting the environmental protections needed in today’s climate crisis more than ever.

The Canadian Mining Association has called for the Canadian government to reexamine the permitting regime in that country, especially in light of Biden’s visit and the possibilities embodied in true cross-border cooperation. Given that Canada’s governing authorities at both the national and provincial levels already are far more forward-leaning in funding actual mining, I would be willing to bet that Canada will achieve a new permitting regime long before the US does.

Final Thoughts

If I’m right on that, it’s a problem on all sorts of levels – for US-Canada cooperation and also for US self-sufficiency, a stated goal of the Biden Administration. After all, at the end of the day, there is no shorter or more secure supply chain, Mr. President, than mined and made in America.

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7 responses

  1. Tracy Weslosky Avatar
    Tracy Weslosky

    Your analysis and commentary is deeply appreciated, thank you. And for the InvestorIntel audience, it is my understanding that Melissa lived in Ottawa during her early professional years in the US Foreign Service. Would like to add that Melissa Sanderson is also serving as the President and an Executive Director for American Rare Earths Limited (ASX: ARR | OTCQB: ARRNF) and to read Biden’s remarks, please go to the following link: https://www.whitehouse.gov/briefing-room/speeches-remarks/2023/03/24/remarks-by-president-biden-in-address-to-the-canadian-parliament/

    1. David Farquharson Avatar
      David Farquharson

      Hi Tracy,
      I’m a long term Zentek shareholder and I wondered if that statement by Biden implied Graphite/graphene development of Albany Graphite mine?

  2. Russell Fryer Avatar
    Russell Fryer

    An excellent overview Melissa. The 3rd major issue is how the USA based billionaires and Hollywood stars fund the anti-mining litigation in the USA. This serial litigation stall tactics sucks the financial air out of mining companies to a point of corporate asphyxiation. Unless this changes, mining for critical metals in the USA is going to be non-existent.

    1. Melissa Sanderson Avatar
      Melissa Sanderson

      Sadly, I agree. Legal reform would have to be built into the legislative reform process such that legal actions may only be filed within a certain window and must be considered and/or ruled upon in an expeditious manner.

  3. Rare Earths Investor Avatar
    Rare Earths Investor

    Appreciate the honest overview of the critical metals mining situation facing potential new mining entities in the US. Can’t be an easy article to write when ARR is sat on several RE deposits in the US.

    Biden is facing a major dilemma. If his admin’ strategically supports a new RE mine within US borders he alienates all those Dem green voters (especially the younger element). This negative would be further amplified by Repub’ support he’s likely to enjoy for such moves. Such would be an anathema to (anti-Trump anything) Dem voters. So, if he does this, then, IMHO, he is looking at a potential defeat in 2024 by voters simply walking away (never mind a potential challenge to his candidacy).

    Further, even if he does support such mining, as you (and others) indicate here, he would still be facing major environmental opposition to permitting at the state and local level; again, taking years to potentially overcome. Even Manchin’s mining reform was shot down just before the 2022 election. In other words, Biden loses on all levels, yet, he is nothing if not a politically expedient politician (like them all). Therefore, is he likely to put a hold on such decisions until after 2024? Or, move to fund those mines in CAD and AUS?

    As you suggest (without Biden moves re., strategic funding) private investors are likely to be very reticent to back such RE mining endeavors. Even the present OEM moves (GM, Hyundai, Kia) are seemingly drawn towards supporting those RE wannabees already with strategic backing in the ROW (e.g., MP, Arufura, ASM).

    Overall, as I suggest in my writings this complex ROW RE situation suggests that few miners will make it to the RE sector dance. Also, those that do will be here well before the end of this decade and will establish moat positions in the ROW mining and/or processing value chains drawing many of the mid and end-line brand name conscious offtakes.

    Again, thank you for your upfront views which as a retail RE investor I am always looking for from management (but rarely see in public).

    GLTA – REI

    1. Melissa Sanderson Avatar
      Melissa Sanderson

      Thanks for reading and commenting on the article. I don’t necessarily disagree with your points but would note the following signs of potential hope: Biden did just approve the Willow oil project in Alaska, part of which is on a Wilderness tract and has deeply riled the environmental community.

      Secondly, there currently are at least 2 (that I know of) bilartisan groups in Congress working on draft permitting reform language using Machin’s proposal as templates.

      Of course I’m an optimistic by nature – couldn’t be in Mining otherwise- but I do have hope that change is in the air… and we’ll be first to pouce on opportunities!

  4. Rare Earths Investor Avatar
    Rare Earths Investor

    I was also optimistic until I watched/participated in the RE sector 2010-11 market. Watching the political landscape since the mid-2010s has made me a much more cautious investor; particularly in such a speculative critical metals sector. I think most would agree that the 100-plus ROW RE wannabees out there presently represent investor minefields. The amount of sector and entity hype and trading is presently smothering the emergence of much of the real RE value out there, but IMHO, it is out there. Further, microanalysis without a macro understanding in relation to RE entities under investment consideration is playing with fire for those looking for the few potential real RE sector long-term winners.

    Again, I appreciate the articles that you and others write here as they provide information for investors to consider and question. Good luck with your RE entity endeavors.

    GLTA – REI

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