1. The US Top-Up tariff is likely to cut China’s mineral exports.
After the US announced on July 11 that China would be charged an additional 10% import tariff, China’s 200 billion Chinese goods were in crisis. Mineral resources for construction, defence, power and chemical applications, such as batteries, are included in the list provided by the US trade representative. It is believed that this move is likely to increase the cost of China’s mineral exports from iron ore to molybdenum and refined copper, causing US buyers to look elsewhere for cheaper resources, therefore cutting China’s exports.
For the US mining industry, this is an opportunity to expand production and increase investment in mining and expand capacity.
2. The United States’ share of global mineral production will catch up
China used to supply close to half the world’s bulk commodities, such as steel, iron ore, primary aluminium, copper, zinc, tin and vanadium.
As a result of the introduction of tariffs, the United States’ share of global mineral production is likely to increase and catch up with China, an example being copper. This is especially true if China is unable to mitigate the impact of the intensified trade war triggered by President Trump’s actions by diverting mineral exports to other non-US markets. If mitigation is not achieved, the result would be a reduction in Chinese metal production. In the mineral industry, China’s supply market has always borne the greatest risk: as the world’s largest producer of many minerals, rare earths (81% of the world’s supply in 2017), thorium (73%), vanadium (54%), lead (51%), molybdenum (45%), zinc (39%) and tin (34%).
Affected companies: Mining companies are likely to benefit from a potentially higher sales ratio in the US compared to 2017. These companies include: Freeport, BHP Billiton, Rio Tinto, Glencore, Antofagasta and Hydro.
3. China still holds the mineral supply the US needs
China will remain an indispensable part of the US minerals market. According to USGS data, in 2013-2016, more than 70% of the world’s largest economies consumed arsenic, industrial diamonds and rare earths imported from China. The United States has imported 62% of its products from China, the world’s largest producer. In 2013-2016, the United States imported at least 20% of tantalum, tungsten, natural graphite and antimony from China, and more than 10% of cadmium, cobalt, indium and vanadium pentoxide. Lithium, bromine and aluminium are also derived from Chinese exports.
4. President Trump is committed to revitalizing local and foreign mining
The prospects for recovery in the US minerals and metals production industry are essentially due to the demand for local commodity consumption as a result of Trump’s planned infrastructure investments. However, the goal of “using the heart of the United States, the hands of the United States, the gift of the United States, and making the United States once again great” may also mean increasing the import of mineral commodities, especially from China. China has always been one of the core sources of US commodities, with other sources including South Africa, Europe, India, Mexico and Brazil.
Last year’s National Geological Survey of the United States pointed out that 21 of the 50 non-fuel commodities in the United States are completely dependent on imports, with particular emphasis on natural graphite, manganese, antimony, rare earth metals and vanadium. These are the core materials in the steel and construction industries and are also used in battery applications.
2018-07-16 13:13:53 Source:China Nonferrous Metals Industry Network