The United States is a world leader when it comes to critical minerals, and America wants in. Washington has just bought stakes in two B.C-based critical mineral companies, sending their stocks soaring. This is the latest move by the White House to take ownership in the mineral supply chain critical to their interests, but it s the first deal proposed for a Canadian company.
00:00:00.000Canada is a world leader when it comes to critical minerals, and America wants in.
00:00:04.840Washington has just bought stakes in two B.C.-based critical mineral companies, sending their stocks soaring.
00:00:11.700The U.S. bought a 10% stake of Trilogy Metals for $35.6 million, and a 5% stake in Vancouver-based Lithium Americas.
00:00:21.420Ottawa had blocked foreign investments in the Canadian critical mineral sector in the case of China, citing national security concerns.
00:00:28.300But it's not yet known how any potential American stakes will play out.
00:00:32.540Well, and this is huge, considering the fact that China just unilaterally decided to block the rest of the world from purchasing or buying any of their critical minerals,
00:00:43.140which includes, of course, lithium, a mineral that is used for electric cars, batteries, defense implements, and all kinds of stuff like that.
00:00:53.060Incredibly critical, and they're becoming more and more hostile towards the United States.
00:00:58.300Which is, they view them as their main adversary, and the United States should be doing the exact same thing.
00:01:04.260Because the United States' biggest enemy is not Russia, it's not Iran, it's none of these countries, it's China.
00:01:12.780And they're deliberately trying to undermine the U.S. at every single chance that they get, including with the procurement of critical minerals.
00:01:23.180And the fact that the U.S. is not moving towards securing those, it's a smart move by the Trump administration.
00:01:30.180This is Dr. Gracelyn Bascarin, director of the Critical Minerals Security Program at the Center for Strategic and International Studies.
00:01:41.400Now, could you first please walk us through the significance of both of the Canadian mining companies that we mentioned, starting with Lithium Americas.
00:01:48.620Clearly, it's got to focus on Lithium, but how significant is that to the U.S.?
00:01:53.580You know, Lithium's not actually as rare as we like to think it is.
00:01:58.140But, you know, historically, in recent years, we've gotten the majority of our Lithium from Chile and Argentina.
00:02:04.360Now, what you see with this administration is a much more targeted effort to build these capabilities onshore.
00:02:10.280And a portion of this equity, there was a 5% equity done in the Thacker Pass project, which is in Nevada.
00:02:16.580So, even though we have Lithium here in the longer term, what we really want to see is a French shore, near shore approach to the Lithium supply chain.
00:02:24.860So, even though we get a lot of our Lithium from Latin America, we get about 65% of our Lithium-ion batteries from China.
00:02:31.740So, what we want to see here in the United States is getting that Lithium in North America, refining it, and then being able to manufacture our batteries so we loosen that reliance on China.
00:02:43.600Now, we know that, as you just said, Lithium-ion batteries, that's the primary move for Lithium.
00:02:49.780Is there anything else that we use Lithium for?
00:02:51.960A variety of different defense technologies, energy technologies, we see it being used in electric vehicles, in particular, are a huge driver of forecasted Lithium demand.
00:03:04.780It really is one of those metals that, in a way, is industry agnostic.
00:03:08.940We need a lot of it, but we kind of take it for granted some days because we don't, it's not as rare, it's not as vulnerable to disruption as some of the other minerals that we hear more about.
00:03:19.060Well, it's the latest move by the White House to take ownership in the mineral supply chain critical to their interests, but it's the first deal proposed for a Canadian company.
00:03:30.600So, let's start with why equity, because we're using equity in a way that is relatively unprecedented and definitely unprecedented in the resources sector.
00:03:39.020So, you know, in the era of this administration, we heard a lot about Doge and wanting to cut our expenses early on.
00:03:45.680What this administration is looking at is a more fiscally sustainable model of providing state support.
00:03:53.080So, we can take the MP materials deal that Doge did, that $400 million of equity that the U.S. government put into MP materials is already worth close to $900 million,
00:04:05.900which means that the taxpayer money is getting a return, and ideally that money is turned around and reinvested into strategic projects.
00:04:15.060So, given that equity allows a shareholder return, as opposed to our historical cheap financing or grants, this administration is really holding on to this.
00:05:14.640So, we are starting to lean into our allies.
00:05:18.220You may have seen that the Export-Import Bank recently did its first loan to Australia in resources since 2013.
00:05:24.900So, we're taking our historical allies and we're deploying our instruments increasingly there, acknowledging that America can't actually do it alone.
00:05:33.480And that's the thing that a lot of Americans ignore, particularly those who are not paying attention to what's going on in the world,
00:05:39.420is that for the amount of minerals that the United States, as the most powerful economy in the world, requires,
00:05:49.000there are simply not enough mines in the United States.
00:05:51.860Of course, part of that is with the whole exporting and offshoring the mining industry to other countries by the Democrats,
00:06:00.540under Obama, under Biden, and so on and so forth.
00:06:03.920A lot of mining towns died off, but it's also that simply there just isn't enough.
00:06:10.840The demand is so high by the American market that you just can't supply it at home.
00:06:19.880And Canada, like it or not, has some of the most abundant mines and deposits of critical rare earth minerals in the world.
00:06:30.780And to buy it from China, to continue to empower your literal enemy by buying from them and depending on them for your supply chain would be self-destructive.
00:06:44.460It would be suicidal for the United States to continue to do that.
00:06:48.920So, to buy it from China, I'd much rather buy it from Canada.
00:06:53.380And then there's that whole, you know, 51st state situation where a lot of provinces and a lot of jurisdictions in Canada are wanting to further integrate with the American economy
00:07:04.580because they understand just the power of not only the American dollar, but the American economy, particularly under a Trump presidency.
00:07:14.280You got places like Alberta, Saskatchewan, with Alberta having the third largest deposits of oil and gas in the world.
00:07:21.380And there's Saskatchewan with this potash, the place with the most potash in the entire world.
00:07:26.480So, the U.S. is looking north for access to those critical minerals.
00:08:09.200Let's move on to the other company that we mentioned, Trilogy.
00:08:12.000What's its potential significance for the U.S.?
00:08:14.140Again, Trilogy is a company that has – it was a bit of an unexpected announcement.
00:08:20.840And partially because the announcement came during the government shutdown when we're not spending as much money right now.
00:08:27.780But, again, it's a project that is really crucial to our supply chain security.
00:08:31.620And some of these companies, there's not a lot of alternatives.
00:08:34.620Remember, one of the big things about this administration is they are looking for projects that are basically shovel-ready or as close to shovel-ready as possible.
00:08:43.520MP Materials, one, because they are the only large-scale producer of rare earths.
00:08:48.000Lithium Americas is doing pretty well with that backer past project.
00:08:51.500And it looks very – it's commercially viable because they already have equity from a company like GM.
00:08:56.000So, for Trilogy, a lot of the outward-looking in thought is kind of continuing that same trend.
00:09:03.300But there's a lot more that we – to be honest, that we're going to need to learn about that deal in coming days.
00:09:08.100Well, I think everyone who's following these deals is going to learn a lot about some rare earth minerals, critical minerals that they had never heard of before.
00:09:15.220The one I want to learn about from you is germanium.
00:09:18.940Apparently, this deal is very significant in relation to germanium.
00:09:21.600So, the question is, how so, how is germanium used, and what is germanium?
00:09:29.340I mean, I don't know about you, but I wish some days that I paid more attention to the periodic table in 10th grade because I think about it every day now.
00:09:36.660So, germanium is an interesting one because it was actually one of the first commodities that China banned exports to the United States.
00:09:44.900And it really started the weaponization of resources that we've now come to become quite familiar up.
00:09:51.380Germanium is absolutely crucial to semiconductors, and it's really hard to make a semiconductor without germanium.
00:09:57.860Now, you don't generally don't dig germanium out of the ground.
00:10:01.700What you do is you actually get it as a byproduct of refining other commodities.
00:10:05.640So, in particular, when I refine zinc, I can get my germanium out of that.
00:10:11.420This is why, historically, Canada has been a really important player here is because even our zinc in the United States, we actually send to British Columbia for refining, and then that germanium has historically come back.
00:10:24.760Obviously, you know, one of the difficulties we have in America, because it would be like, well, why don't we build one here, if we're in America first mentality, is that it is not economic.
00:10:36.200You know, I always say if minerals were all the bang and rage that we say, why are we struggling to get capital moving?
00:10:42.940And a lot of that is because the economics of it aren't great.
00:10:46.500And part of that is because China has produced more and more and more.
00:10:49.440So, you have a lot of supply, and then demand is not keeping up with that.
00:10:53.440So, you have – that's the perfect economic equation for low prices.
00:10:57.400When it comes to zinc and being able to get that germanium out of it, zinc refining charges are pretty much negative right now.
00:11:06.960So, no company in the United States – and we've looked, right – is racing to say, well, I'm going to build a 75-year-long smelter because I'd like to operate cash negative.
00:11:17.360So, really, you know, Canada has been a very important ally, whether we feel it or not right now, in that that germanium is really crucial for our semiconductor manufacturing industry.
00:11:29.680What concerns are you hearing over both these deals, if any?
00:11:35.500So, the big one is this is a very different way of doing business, right?
00:11:39.280And a lot of these are coming top-down, very high-level announcements.
00:11:43.480They're not necessarily being done competitively, so you're not seeing competitive tenders.
00:11:48.720For some of them, the authorities are a little bit opaque.
00:11:53.060MP materials, in my opinion, a great deal.
00:11:55.940But the Department of Defense authority to do it was a little bit opaque.
00:12:01.080So, again, you know, in a capitalist society, in an ideal world, it would be a public competitive tender.
00:12:06.840There would be a process for selecting these.
00:12:09.960And you're not necessarily seeing that.
00:12:12.160So, there is a, like, I think there's an understanding that some of these tools are important, especially because they are nascent markets and nascent industries.
00:12:20.240However, you know, what is the authority and is this being done transparently?
00:12:26.440And, you know, to be candid, as much as I'm supportive of the public-private cooperation, it's not always transparent.
00:12:40.480And I think there's two ways to look at that.
00:12:42.260So, the one is we're seeing just equity as a growing tool here in the United States.
00:12:46.940And, again, it's creating an ex-China market, right?
00:12:50.340You're starting to see companies like Apple and GM prefer to sign off-take agreements with these companies because they don't want disruptions from China.
00:12:58.760And that's kind of the model that we want to see is that eventually the price will come up because there's enough off-take from allied companies.
00:13:07.300The second thing is we have something called the Development Finance Corporation.
00:13:10.280And, historically, it was kind of like a development finance institution limited to being able to fund things in lower- and middle-income countries.
00:13:18.440We in the United States created that in 2018 under President Trump's first administration.
00:13:23.700It was given a seven-year mandate, which means it's actually up for reauthorization this year.
00:13:29.480And DFC is really important to this administration.
00:13:32.180And one of the limits to that was that the way that the government could take equity in projects abroad, it wasn't scored efficiently, which created a disincentive to put it onto your balance sheet.
00:13:44.060Very likely, you're going to see DFC be able to take equity in more projects abroad.
00:13:49.220So, what you end up ultimately seeing is more equity both at home, in North America, but also abroad.
00:13:55.680And when you take that in conclusion, again, you're seeing a much more active state in a sector that historically has not seen a lot of state intervention in the last 40 years.
00:14:05.440You know, and that all goes back to the whole Trump trying to squeeze China out of the markets because he understands as much as he says,
00:14:13.860you know what, I have a decent relationship with President Xi, and he might.
00:14:26.820He's actually friendly with Putin on a personal level overall, but he understands like, dude, you know, you got to get your act together.
00:14:34.380We got to end this war, this and that.
00:14:35.920And, you know, he's able to separate on a personal level versus I know you're my adversary, and I know that you're working to undermine my economy and my country.
00:14:45.620And that's the whole thing with China, right?
00:14:47.680China coming out and deciding that they're not going to be selling critical minerals to particularly the United States being their main target.
00:14:55.980But they also said other countries all over the world just to save face and say, oh, we're not just targeting the United States.
00:15:03.240And that's why Trump put 100% additional, 100% additional punishing tariffs on China because Trump, of course, he's not just going to sit there and let them do what they're doing.
00:15:12.780And this is an effort by the United States and by the Trump administration to become as independent from China as possible, but also to push them out of the market.
00:15:25.060The world became very dependent, a little too dependent on Chinese manufacturing and Chinese supply of raw materials when it came to semiconductors.
00:15:40.040They're in your fridge, they're in your TV, they're on your smartphone, they're in your smartphones, they're in vehicles now, they're in everything.
00:15:48.020And if China controls those, then you're giving them a power that you don't want them to have.
00:15:53.920So this is yet another move by the Trump administration to create a more powerful, more self-reliant North America,
00:16:03.520using Canada as the supplier of those resources that they're no longer going to be getting from China.
00:16:09.460Canadians can be forgiven if they've got a little bit of whiplash in relation to our relationship with the Americans.
00:16:15.520In your opinion, should Canada be welcoming or wary of these Washington deals?
00:16:20.760So anytime you have commercial engagements, I think it's a stronger argument for better diplomatic relations.
00:16:29.960And, you know, I think that it is generally quite positive that the U.S. government is backing Canadian companies.
00:16:36.780And my hope sincerely is that this is a start of a more productive relationship between the two countries, especially because in essence, the U.S. government part owns Canadian companies right now.
00:16:47.940So really, this should be the foundation of a much better relationship going forward.
00:16:53.100And in an ideal world, a much stronger minerals diplomacy relationship.
00:16:59.100And this has a lot of positive spinoffs.
00:17:01.420You know, sometimes we kind of get into the like, great, we're going to rely on dirt and rocks.
00:17:05.240But with that comes processing, the expansion of energy infrastructure, manufacturing capabilities.
00:17:11.960You know, we talked about lithium ion batteries at the beginning.
00:17:14.880We want to manufacture more of those here, right?
00:17:17.320So it has a lot of positive economic spinoff benefit.
00:17:21.080So my hope is that this is just the start of a better relationship.
00:17:25.500And it goes back to, like I said before, in many videos, the further integration of the North American economy to become as self-reliant as possible, to just push out China, push out the European Union, even though Canada is trying to, we got to get closer.
00:17:44.420We're the most European, non-European country with Mark Carney.