Some potential winners from the White House commitment to ‘Securing a Made in America Supply Chain for Critical Minerals’ Announcement

Could this be the moment the USA finally takes some actions towards supporting critical minerals supply chains? The big news in the world of securing domestic supplies of critical minerals for the USA last week were two key announcements by the White House:

Additionally, the first article linked above refers to earlier reports (E.g: America’s Supply Chains) and states: “the reports recommended expanding domestic mining, production, processing, and recycling of critical minerals and materials – all with a laser focus on boosting strong labor, environmental and environmental justice, community engagement, and Tribal consultation standards.”

The takeaway here is that investors looking to benefit from the new White House initiatives need to look for U.S. domestic critical mineral projects, processing projects, and recycling projects. A U.S.  processing project would include Energy Fuels Inc. (NYSE American: UUUU | TSX: EFR) rare earths processing at their White Mesa mill in Utah, USA. Today I will focus on the U.S. critical minerals projects.

China has dominated the critical minerals supply chain, leaving the U.S. vulnerable this decade

After many years of talk and very limited action, it appears the USA may finally be waking up to the need to urgently support and facilitate domestic U.S. critical minerals supply chains. Those of us involved in the manufacturing industry know that for years China has been buying up and controlling the critical minerals’ supply chains. The consequences are that China now completely dominates the supply chains for lithium-ion batteries, electric vehicles, wind energy, and solar energy. These are multi-trillion-dollar industries, but if you cannot access the raw materials then you cannot produce a product. We saw that in 2021, with semiconductor shortages slowing the U.S. auto industry, and we are seeing it again now with lithium-ion battery shortages leading to a limited supply of domestically produced EVs, despite enormous consumer demand. Tesla has an estimated 1.3 million pre-orders for its Cybertruck but has delayed production until 2023 due to not having enough lithium-ion batteries.

Green energy from solar, wind, and nuclear will increasingly power electric vehicles

Companies that may benefit from U.S. support of the critical minerals industry

Looking through the White House announcement gives us several clues:

  1. “These minerals—such as rare earth elements, lithium, and cobalt……As the world transitions to a clean energy economy, global demand for these critical minerals is set to skyrocket by 400-600 percent over the next several decades, and, for minerals such as lithium and graphite used in electric vehicle (EV) batteries, demand will increase by even more—as much as 4,000 percent……will also discuss $3 billion in BIL funding to invest in refining battery materials such as lithium, cobalt, nickel, and graphite
  2. “President Biden will announce that the Department of Defense’s Industrial Base Analysis and Sustainment program has awarded MP Materials Corp. (NYSE: MP) $35 million to separate and process heavy rare earth elements at its facility in Mountain Pass, California.”
  3. “Berkshire Hathaway Energy Renewables (BHE Renewables) will announce that this spring, they will break ground on a new demonstration facility in Imperial County, California, to test the commercial viability of their sustainable lithium extraction process from geothermal brine……In addition to BHE Renewables, Controlled Thermal Resources (CTR) and EnergySource Minerals have established operations in Imperial County to extract lithium from geothermal brine.”
  4. “Redwood Materials will discuss a pilot, in partnership with Ford and Volvo, for collection and recycling of end-of-life lithium-ion batteries at its Nevada based facilities to extract lithium, cobalt, nickel, and graphite.”
  5. “Tesla intends to source high-grade nickel for EV batteries from Talon Metals’ Tamarack nickel project.”
  6. “DOE, DOD, and the Department of State signed a memorandum of agreement (MOA) to better coordinate stockpiling activities to support the U.S. transition to clean energy and national security needs.”

The winners of the U.S. critical minerals policy should be those with projects in the USA which are focused on critical minerals (rare earths, lithium, cobalt, nickel, graphite), critical minerals processing and critical minerals recycling. Needless to say, they will need to pass environmental and permitting rules and support local communities and American jobs.

Of the companies mentioned above, MP Materials and Talon Metals are the only two that are listed. BHE Renewables, Controlled Thermal Resources (CTR), EnergySource Minerals, and Redwood Materials are all private companies.

MP Materials Corp.

MP Materials Corp. (NYSE: MP) owns and operates the Mountain Pass open pit rare earths mine facility, located in Mountain Pass, California, USA. Mountain Pass plans to have an output containing 5,000 metric tons of neodymium and praseodymium (NdPr), starting in ~2022. MP Materials also plan to have their own Heavy Rare Earth separation facility at their Mountain Pass Mine. As discussed above MP Materials have now been awarded a DoD contract (refer to the US$35 million in point 2 above). MP Materials Chairman and CEO, James Litinsky, stated: “The ability to mine, process, and refine rare earths at Mountain Pass is foundational to a national effort to secure the U.S. rare earth supply chain……We thank the Department of Defense for its confidence and support.”

MP Material’s stage III plan is to develop a rare earth metal, alloy and permanent magnet manufacturing facility in Fort Worth, Texas. MP Materials has an agreement to supply General Motors (GM) with magnets to be used in EV motors for the Hummer EV, Cadillac Lyriq, Chevrolet Silverado EV, and more than a dozen models using GM’s Ultium platform.

Talon Metals Corp.

Talon Metals Corp. (TSX: TLO) has a JV with Rio Tinto (ASX: RIO) at their Tamarack nickel-copper-cobalt Project in Minnesota, USA. Talon owns 50% but can earn-in to a 60% share of the Project. Talon recently announced a 5-year nickel supply agreement with Tesla (NASDAQ: TSLA).

Other critical mineral companies with USA projects

Lithium – Lithium Americas Corp. (NYSE: LAC | TSX: LAC), Standard Lithium Ltd. (TSXV: SLI | NYSE.A: SLI), Piedmont Lithium Inc. (NASDAQ: PLL | ASX: PLL) (have a supply deal with Tesla), Cypress Development Corp. (TSXV: CYP | OTCQX: CYDVF), Ioneer Ltd (ASX: INR), Albemarle Corporation (NYSE: ALB).

Cobalt – Jervois Global Limited (ASX: JRV | TSXV: JRV), Electra Battery Materials Corporation (TSXV: ELBM | OTCQX: ELBMF) (previously First Cobalt), Global Energy Metals Corporation (TSXV: GEMC | OTCQB: GBLEF).

Graphite – Westwater Resources, Inc. (NYSE American: WWR), Syrah Resources Limited (ASX: SYR) (spherical graphite plant planned for USA).

Nickel – Global Energy Metals Corporation (TSXV: GEMC | OTCQB: GBLEF).

Rare Earths – Lynas Rare Earths Limited (ASX: LYC) (rare earths processing plant planned for USA).

Li-ion batteries – Magnis Energy Technologies Limited (ASX: MNS) – New York battery factory.

Li-ion battery recycling – Li-Cycle Holdings Corp. (NYSE: LICY) – Partnership with GM and LGES’s Ultium JV for a battery recycling facility in Ohio.

Closing remarks

In addition to the above-mentioned companies with U.S. projects it should be noted that allied countries such as Canada and Australia will also be needed to help supply critical materials. Several of these companies can be found here in our InvestorIntel member’s page.

The USA’s domestic production of green energy and the associated need for critical materials supplies has long been a major weak point for the USA to compete with China. It does look like the USA is finally taking some actions to catch up, albeit still about a decade behind China.

Investors can look to play this catch-up trend, and as we saw with Tesla, if you invest early the sky is the limit.

Disclosure: The author is long Tesla (NASDAQ: TSLA), MP Materials (NYSE: MP), Lithium Americas (TSX: LAC), Piedmont Lithium (ASX: PLL), Jervois Global (TSXV: JRV), Electra Battery Materials (TSXV: ELBM), Syrah Resources (ASX: SYR), Lynas Rare Earths (ASX: LYC), and Magnis Energy Technologies (ASX: MNS).

Invitation for Trump to join Lifton on the Technology Metals Show to discuss the Critical Materials Executive Order issued yesterday

This morning I raced through Fallon, Kimmel, Corden and Colbert as I do every morning with a cup of coffee. The idea? Hit the ground running having enjoyed the late-night talk show hosts translations of the news events from the day before…

Henry Weingarten doesn’t understand why I cannot commit to a follow up interview, he’s right – we need one. After all, in our last interview he forecasted everything from who will win the Presidential election to a bullish graphite, gold and media market this Fall. Undoubtedly we would all like to know what percentage of forecasts he is making on our capital markets that are right and which ones are wrong. Alright, we will get this done and live by next week.

Reviewing the emails, Russell Fryer of Critical Metals PLC (LON: CRTM) alerted many of this AM to the Executive Order on Addressing the Threat to the Domestic Supply Chain from Reliance on Critical Minerals from Foreign Adversaries that was published on the White House site yesterday.

Russell adds in his email: “The use of the term ‘foreign adversaries’ is quite a strong phrase, designed and inserted to call out China…” He then adds his summary points of interest:

  1. the United States develops secure critical minerals supply chains that do not depend on resources or processing from foreign adversaries. (i.e. China)
  2. the United States develops globally competitive, substantial, and resilient domestic commercial supply chain capabilities for critical minerals mining and processing.
  3. reduce the vulnerability of the United States to the disruption of critical mineral supply chains through cooperation and coordination with partners and allies, including the private sector
  4. build resilient critical mineral supply chains, including through initiatives to help allies build reliable critical mineral supply chains within their own territories

OK, thanks Russell and kudos on listing Critical Metals PLC in London earlier this week, we are all watching to see what you do next.

Now Trump? While the content of this Executive Order is unquestionably of great interest to me and my associates in this sector, why wasn’t Trump busy investing in how to clean up his post debate mess is of great interest to me. Experts tell me that the positive he is doing for critical materials will continue no matter who becomes President this Fall, but it does makes it hard to communicate what I deem to be a very positive action on his behalf when he is not behaving like a gentleman.

For the record, talkative is fine. After all, rare earths’ experts are exceptionally talkative….

In fact, I was speaking with Jack Lifton earlier this last week and asked him about a new editorial candidate for InvestorIntel to do a regular column on our sector, and his response to one candidate was “he’s good, but if you ask him the time, he will give you the history of how time was created.”

My point? Give us Trump for the Technology Metals Show and I will have no challenge being the moderator with Jack Lifton as I am used to strong driven communicators with passionate positions on why we should all be buying their stock. On that note I would like to personally extend an invitation for President Trump to be on the Technology Metals Show and have Jack Lifton interview him on this Executive Order?

Now why will this work? It will work, because we are all on the same side here…when it comes to our North American issues around sustainability, we all agree. No one should ever be solely reliant on one nation for all of our Technology Metals.

See a theme here?

Before I change the point here, yes, I do plan on asking Ron Wortel to write a piece on this order ASAP. Why Ron? Well in a conversation with Ron yesterday in discussions about him taking on a regular moderator role of a critical materials editorial board (this clever idea was suggested to me by Jeff Green and his team at J.A. Green & Company last week). Ron was discussing his history in rare earths, and you know what? I think he can do it and do it well. Ron’s style is understated and many of us enjoy reading well done text that is written by knowledgeable professionals that understand the business…you will of course tell me what you think – you always do.

Alright, I am running to go assist Raj Shah on putting together a Top 20 InvestorChannel Watchlist of graphite companies today. Would like to thank Julie Pacquet of Nouveau Monde Graphite Inc. (TSXV: NOU | OTCQX: NMGRF) for being the catalyst of this idea.

On a final note I am going to start calling out ‘flags on the field’ of the capital markets and today I would like to highlight an analyst who did what I deemed a ‘smackdown’ on another rare earths company in an eblast I received yesterday. Let me add, I have grown weary of advising him that his content is not my friend and have been unsuccessfully and getting off of his darn list, but hey this is simple.

How can you call out other critical material company when you sit on Boards and are presently raising funds for your own company (in the same sector of course)? When are we as investors simply going to build a wall for you and insist that you not climb over it? Consider this my brick, and as I have told you before – why can you not just market yourself without tearing someone else down, especially when you do not know what is going on.

It seems we have analysts that could use a brush up on professional behavior as well.

Enjoy your day, we will get Mr Weingarten set up for an interview, finish the InvestorChannel Graphite Watchlist, and attempt to get the news release written on the new Investor Talks video meeting series and in your inbox by Friday afternoon.

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