How American Mining Enterprises Supported by Trump Will Compete with China

Earlier, Trump signed an executive order to identify 35 new sources of minerals that the United States considers vital to the country and streamline leasing and licensing procedures to speed up domestic production.

"Even though Trump's initiative on"key minerals"has helped to strengthen the recovery of American mining industry, it is still difficult for American companies to compete with low-cost Chinese competitors," said one U.S. economic analyst. However, investors have a unique opportunity to position themselves before tensions between Trump and China escalate.

Because the United States is not a low-cost producer, the current social cost structure is so high that companies need better pricing to make profits, but the government has not elaborated on how the United States will truly compete with China in cost.

In 2016, the United States relied on imports of 23 minerals, including cobalt, lithium, tungsten, graphite and rare earth elements, according to a report released this week by the U.S.

Department of the Interior. According to the report, the United States relies most on China for its mineral resources. China provides at least 20 important minerals for the world. China produces the vast majority of heavy rare earths, tungsten, indium and antimony.

Economic analysts also mentioned the fate of Molycorp, the only U.S. rare earth miner and producer, which mined California's rare metal deposits in 2015, but ultimately filed for bankruptcy because it could not compete with low-cost Chinese producers.

Now, the Trump administration wants to make American miners more competitive through a series of policy support, but in Molycorp's case, they won't make the situation any better because Molycorp has a lower grade. When they produce, the quality of minerals is the most important, and if you're not as good as others, you still won't make money.

But in terms of policy, the miners were positive about Trump's administrative order. Because it "represents a turning point in key U.S. mineral policy," said McKenzie, CEO of Ucore Rare Metals. "The new government decree has reduced the company's expected potential mining time dramatically, reducing project construction from at least three years to 18 months, involving a decline in unnecessary regulatory barriers" and "the opening of capital markets to mining investment".

While acknowledging that the overall cost structure of the United States is higher than that of countries such as China, McKenzie said the electric car revolution would drive up prices for all rare earth miners. He also said that Ucore's molecular recognition technology will help U.S. producers reduce costs and make them more competitive with Chinese companies, just as fracturing technology has helped U.S. foliate oil compete with global rivals at low cost. Recently, some people claim that rare earth elements can also be found in coal and coal waste, but there is no commercial scale extraction method at present.

Rare earth elements are used to make products such as mobile phones, computers, wind turbines and medical devices. Tungsten is used in automobile manufacturing, military weapons and microelectronics manufacturing. As we have seen in the past, when conflicts arise, the Chinese government does not hesitate to reduce exports of metals of strategic importance. For example, in 2010, due to the territorial dispute between China and Japan, the Chinese government closed its rare earth exports to Japan almost overnight.

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