U.S. Takes Equity Stakes in Miners: How is the Sector Reacting?

As rhetoric moves to action, the US government has recently taken equity stakes in several mining companies.

What impact are these actions having on the mining sector? >> Yeah, there's really been uh about three or so high-profile uh equity stakes that the government's taken over the last, you know, 2 to 3 months.

Uh these equity stakes range anywhere from about 5 to 15%.

Uh it's it's a very important step that we've seen because what this does is encourage additional investment in the space. uh it's all geared toward you know really making a robust domestic supply chain um and it does provide some level of not only uh additional capital for these these miners but I think more importantly is the clarity that it gives the mining industry overall lithium Americas was one of the benefactors of an equity stake about a 5% stake was taken by the US government this is a a Canadian listed company they have a uh a large lithium deposit Nevada which you know if we were to talk about this 18 months ago, uh GM actually made a $650 million investment uh in the same company, in the same mine.

Uh Trilogy Metals, which has um some uh copper reserves that they're looking to open up uh in the Ampler Mining District in Alaska, uh is also seen an equity stake that will be about 10%.

And probably the most high-profile would be MP Materials.

Uh they're a rare earth uh producer.

Uh this is one that's been increasingly important as we see you know the tensions that we've seen with China and and really the strangle hold that they have on the rarest market.

Um this is also even more significant than we've seen maybe from some of the other uh targets that the government's taken because it does two important things.

So uh first the department of defense has agreed to purchase 100% of the output uh of the new 10X facility.

So that's important because it provides some foresight into what could go on.

And something that's different than we've seen in the past with other deals is that they're also putting a price floor in place.

So this also gives MP Materials in this case um you know some stability as it relates to financing.

That combined with the Department of Defense being the only uh uh company that will step in if that price floor isn't met, I I think are two very important signals as to how the government's viewing uh rare earth and other critical materials.