RE:RE:RE:RE:RE:RE:Lets all remember to not get too lost in the weeds....Materials, thanx again, some really good points and insight. I must also congratulate you for being in the mining investment biz this long...you must be wise beyond your years!
Lots of good talking points, if I can address a few of them...
"Needless to say, it will come at someone's expense since it is basically a form of taxation."
Yes I agree in general tariffs are a form of taxation, but with a caveat. The 'someone's expense' relative to our case/discussion, would be the US public and the OEM's. I just think the US public has already voted about how they feel about that 'taxation', and the OEM's, as stated before...no one cares that the OEMs must change course from the free ride they have had up until now...and pay up!
The caveat in my opinion is China. China has been quietly been manipulating their way into all industrial facets around the world for too long now...both dominating, controlling and suffocating industries through child slave labour, government subsidies and God knows what else...we're not even talking about the theft, bribery, and other criminal practises they have mastered over the years in order to gain advantage. The very reason I would suggest most of your mining stocks are hanging by a thread is because China has infiltrated and overproduced that relative commodity (critical minerals) to the point of putting everyone else out of business...thus controlling supply and dictating terms...nickel, cobalt, graphite, lithium...take your pick.
Pick any continent...ask the EU how their car industry, EV industry is doing since all their top dogs partnered with Chinese companies not so long ago...The EU is so far into the spiders web now if they kicked China out, the entire industry would implode. One of many examples...
From Trumps perspective on China, it's way more than simply 'taxation'...its more about rebalancing the order of things globally re China being put in their place and knocked down a few pegs. Think BRICS, currency/US dollar, AI race, Taiwan, South China Sea, the Arctic, Ukraine and on and on. China is Trumps #1 agenda and tariffs will be the stick that delivers the pain.
If XI was your neighbour...he would be like the nicest neighbour...smiling every day as you pulled out of your driveway, waiving...he would let you borrow his lawn mower, his leaf blower, his truck...he would even provide the gas to put into his lawn mower and truck...life would be easy and house maintenance would be cheap and easy…and all the while behind the scenes, Xi would be slowly owning more and more of your house, until one day you're advised by the bank that now Xi in fact the new owner of your house...and you wonder wtf? How did that happen? Trump is going to disrupt that manipulation and set China back a few years.
"As regards critical minerals, I feel it will take significant time, willingness to invest, and expertise among other things to re-establish effective ex-china supply chains."
Well said, yes it will take time. One thing that I have learned over the years is that when a government wants or needs something done, it's never about the money...there always lots of money. Right now today as I type...the US government has been cut off from Chinese graphite in any form for anything military related etc...zero. Where is the US gov't going to get their graphite from for high tech military purposes etc...??? Syrah is done, there is no supply coming from Syrah anytime soon or ever...Syrah was the only other supplier to the US, other than Northern...so now what?
US national security pretty much trumps everything else in the US...I think we would all be shocked and surprised to see how fast things can happen if that thing has to do with US national security...in addition to a Chinese twist at that. Forget EV's, OEMs...I'm talking about straight up US military weaponry and the requirement to stay relevant and effective.
AI, every single semiconductor chip has graphite in it re heat absorption (more silicone in the lower end chips and higher graphite in the higher end ones)...where is the US govt getting their graphite from to support their newly on shored semiconductor chip manufacturing industry? Chips need graphite, even if it's a small amount...AI chips need more I would think...where is it coming from?
AI and Crypto require copious amounts of energy...requirements that the current US grid capacity simply cannot handle by a country mile...many say one of the most viable near term solutions is large scale battery storage...if the US is going to support it's AI industry, where are they going to get their graphite from for those large batteries? Connecting the geo political dots...US vs China one could argue is all about the AI race, both countries are all in and this appears to be the hill they are both willing to die on. Large scale battery storage requires graphite...again, where's it coming from? Will the US just throw in the towel on AI, on tech?
Russia has shown the world what happens when you lack military tech...you end up pushing 500k of your own people through the meat grinder with little to nothing to show vs high tech weaponry....doing more with less is the the name of the game going forward...the world is watching and adapting, China more so than anyone.
If we were only talking about EV's and nothing else...oh ya, especially with Trump running the show....a decade plus re supply chain 'time'...but it's about so much more than just EV's. If Trump wants it done for national security reasons, I think it gets done way way sooner. I don't know another graphite company in NA that is shovel ready today on multiple fronts...all major permits in hand, that just needs some cash to get things moving. Up until now there hasn't been any panic or fear of loss of supply...thanx to Trump, China and Syrah...there is full blown panic out there as we chat, we have just yet to see that translate into action as of yet...but I think it's coming, like a tidal wave.
"The one wild card might be that tariffs would force the price of critical minerals up big time. There are ex-china sources in place in other parts of the world that would be incentivized to increase production and reopen mines that have been put on care and maintenance. They've been unable to compete with China up until now. That would shorten the time factor considerably."
Yes, agreed...the best thing about tariffs is the 're pricing' of non-chinese graphite...especially to current producers...it is a game changing, company making event period.
Maybe you could provide some examples of "ex-china' sources that could benefit etc...Syrah was one, they're done. Nextsource is in Madagascar, right next door to Syrah....they have been having their own troubles of late there...another AK47 country...regardless of how good their deepest is or isn't, how many US customers are going to rely on supply from that region of the world after Syrah's reality check? Would you pour billions of US dollars of investment into that part of Africa to which China basically owns the majority of the infrastructure and politics through years of investment, bribery and theft? Really, how well has that worked out for Syrah and their customers to date?
There is a graphite mine in Brazil...Canadian company...think BRICS...when does China say that's enough product going to the US...you need to stop that, but I would be happy to buy that supply and avoid EU ESG tariffs for my EV's going into the EU.
NOU here in Canada...they don't even have their environmental permits for their main deposit yet...they had to go out and buy a low level, poor quality deposit re Mason graphite...that was sad...still waiting for the PEA on Mason's deposit...it will blow, you wait and see...
Westwater in the US...they had a contract with Syrah to provide them with feedstock...lol...and on and on.
Yes, tariffs will result in a higher non Chinese graphite price which will lead to more projects becoming more economical...that is great for the industry...but the point you mentioned earlier...it's all about time...the US military is out of time as per recent ban from China...time, and the ability to delver, execute and provide that material is all that matters now. How many companies outside of China and Africa can realistically deliver on that requirement in the near term?
NGC doesn't need that much money to break ground on multiple locations...maybe 200 ish million in total capex wise for Bissett Creek, Namibia, and LDI 2.0...that money is peanuts in the grand scheme of things. A drop in the bucket...I suggest that after we get that tariff number and as the market and key US personnel begin to digest the severity of their conundrum...look out.
I would like to leave you with one possible low hanging fruit, low risk, monster high reward scenario to ponder...
1) Syrah is dead in the water. Syrah is sitting with an almost completed EMPTY anode facility in the US with a wack of US costumer contracts (Tesla, Panasonic, Westwater, US govt? and others) piling up...supply contracts with ZERO SUPPLY!
In addition, Syrah has recently defaulted on their US govt loans I belive and risk losing their anode facility to the US govt...someone correct me if I am wrong there...
2) Northern Graphite is set to re open LDI on January 6th (fingers crossed)...with the potential according to the company to ramp up LDI 2.0 to 25k tonnes in 2025...Bissett sits idle, major permits in hand ready to break ground...according to Benchmark Minerals, the highest margin undeveloped graphite resource in the world (that was from a few years back mind you)...NGC has feedstock, with Bissett Creek, a lot of feedstock...and not in Africa!
Syrah has the facility, the contracts and the US govt as a main $$$$ backer...
NGC has the geographical location, the feedstock supply, and the ability to rapidly expand in response to increased demand...
According to US DOE...they cannot fund non-US entities; however, if the non US entity (NGC) was to JV with the US entity (Syrah)....DOE would be allowed to fund NGC as I understand it...
If Syrah loses their US facility, what do shareholders have left? Their mine is a write off...what's left?
NGC just needs capital to get things moving...massive tariffs would pour fuel on that fire, but a JV with Syrah would be rocket fuel. Combining infrastructure assets with a safe and reliable feedstock is exactly what the US govt requires to get them out of their current jam.
I would suggest the US govt would throw a lot more money at that potential JV given the totality of that picture...a 'consistently safe and secure supply of anode'...what other non Chinese entity is able to produce anode at scale in the near term? Anyone? Yes, there are some sythetic players in the US (none producing)...and not nearly enough to supply even a fraction of todays current demand, let a lone going forward a few years.
Life is about timing. Investing is about timing. What does it matter how these two companies arrived here at the end of the day. What matters is the safety net this combined entity could offer all of North America re non Chinese anode supply, at a time when NA needs it the most.