After a nail-biting election, we now know that Joe Biden will be the 46th President of the United States. What changes do we expect his leadership will bring to the mining and energy sector?
On day 1 of the Biden Administration he is expected to take immediate actions to set new limits on methane pollution and existing oil and gas operations, developing rigorous fuel economy standards and moving heavy and medium duty vehicles towards zero emissions.
Ultimately Biden’s climate plan is expected to boost lithium and the battery raw material supply chain and by the end of his first year in office, America is expected to be on an irreversible path to achieve economy wide net zero emissions no later than 2050 There are a host of domestic raw material projects and it stands to be seen whether the Biden Administration will provide much needed finance to get these projects off the ground. Either way, we should start seeing stronger capital market support for clean energy projects and for mining projects that support Biden’s climate change policies.
Beyond Biden’s climate change goals, he has pledged to add 10 million good paying, middle class, union jobs which will expected to be realized through his infrastructure legislation. Strong infrastructure development projects is usually a trigger for bulk and base commodities including copper, iron, and steel. Utilising scrap steel where possible will play nicely into Biden’s infrastructure goals while marrying his climate change ambitions.
While the elections provide a level of certainty in terms of the US’s future policies, this does not spell the end of precious metal projects. We must remember that the US added 6.6T in public debt during Trump’s term so far which should continue to spur gold and precious metals.
While Biden’s leadership may result in a truce in the US-China trade war, Trump’s focus on reducing America’s $345.6bn trade deficit with China may have kick-started both countries to chart a more domestic course.
China published a report entitled the “Dual Circulation Strategy (DCS), which aims to maintain China’s export economy while bolstering its domestic consumption through state assistance of local firms, in the wake of the anti-globalisation movement. While Biden could reverse this trend by restoring free-market trade between the two nations, one needs to question whether it might be too late as China has already started going down this path.
China remains the world’s biggest polluter but has recast itself in recent years as a champion for climate change, revealing ambitious new targets to reach peak carbon emissions by 2030 and carbon neutral by 2060. At least with Biden at the helm there may be opportunity to build consensus on issues like climate change policies which could start to restore relations.
Ultimately, we believe we are at the precipice of a new mining cycle and if Biden’s policies are realized, with the financing to back it, it could spell the start of a renewed upward trend for mining, the likes of which we haven’t seen since 2010/11 economic recovery following the GFC.
If you have a project in Pre-IPO or IPO stage, I urge you to please get in touch with us so we can discuss how best to position your company to take advantage of these new mining trends.
