Australian mining stocks with critical minerals projects made dizzying gains on Tuesday, fueled by signs of US interest in equity stakes as President Donald Trump intensifies a strategic competition with China.
Companies will brief the Australian government ahead of talks between Prime Minister Anthony Albanese and Trump in Washington next week, according to statements from Nova Minerals Ltd. and Resolution Minerals Ltd. The two companies’ projects, located in the US, contain critical minerals - antimony and tungsten - metals used in advanced defense technology.
Shares of Resolution soared 49%, Nova traded as much as 15% higher. Trump and Albanese will discuss critical minerals and rare earth elements, both companies said.
In recent months, the US has begun taking equity-like stakes in key players within the sector, acquiring positions in rare earths producer MP Materials Corp., Lithium Americas Corp. and semiconductor giant Intel Corp. The move was part of the US’ broader strategy to develop supply chains to compete with China’s dominant position.
More than a dozen Australian mining firms last month held meetings in Washington with officials from various agencies, and were told that the administration is looking for ways to take equity-like stakes in companies, according to people familiar with the talks.
China recently unveiled new curbs on its exports of rare earths and other critical materials, citing national security grounds. The new regulations required exporters of even traces of certain metals to obtain an export license, the country’s Ministry of Commerce said last week.
“The re-emergence of trade tensions between China and the US has also reignited investor sensitivity to geopolitical risks in the supply chain,” said Justin Lin, investment analyst at Global X Management in Sydney. “China has reminded the world that it can use its dominance in rare earths and will likely continue to do so in the foreseeable future.”
Other critical minerals stocks Arafura Rare Earths Ltd. jumped more than 26%, while Australian Strategic Materials Ltd. rose 52%. Lynas Rare Earths Ltd. traded more than 8% higher. US and South Korean peers also surged on Monday.
Resolution’s Chief Executive of US Operations Craig Lindsay said in a statement Tuesday that his firm had been invited to brief representatives of Albanese’s government ahead of the Trump meeting. The move “reflects the constructive cooperation between Australia and the US on the development of secure, transparent critical mineral supply chains”, according to the statement.
The bull run for critical minerals stocks has been further flamed after JPMorgan Chase & Co. vowed to funnel $1.5 trillion into industries that bolster US economic security and resiliency over the next 10 years. The largest US lender said this included critical minerals.
The rally also comes as the US and Australia announced further steps to jointly develop and produce long-range guided weapons, deepening their defence relationship as both counries seek to check China’s rise.
Source: www.bloomberg.com
Aleksei Andrievskii is the founder of the ANDRIEVSKII SEA WEALTH family office in Cyprus, a member of the advisory board at Bendura Bank AG, Liechtenstein