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- For the last 20-odd years, China has been the overwhelmingly dominant figure in many critical minerals required by the U.S.
- But, steadily, investors are cottoning on to the Biden-led shift back to North America, fuelled by his new “Buy America” executive order and ambitious climate targets
- ASX-listed Tao Commodities (TAO) — which owns the Titan titanium and zircon project in Tennessee — is poised to take full advantage of the return to North American critical minerals production
- The company is currently engaged in a phase three drilling program with the aim of delineating a maiden resource estimate and a subsequent scoping study
- The company also recently commenced work on a partnership with a leading U.S. research institution to develop zero carbon, low-cost titanium powders
- The shifting U.S. critical minerals environment has sent Tao Commodities’ share price up more than 87 per cent so far this year, from just $0.27 on January 1 to $0.82 on February 16
Joe Biden, recently elected President of the United States, has held the Oval Office for a little over two weeks, but already the U.S. — and the world — is starting to see some pretty drastic changes.
The fact that American politics seems less like a low-budget reality TV show and more like a semi-functioning first-world democracy is one thing, but it’s the more intricate affairs — foreign policy, trade relations, climate change — that are gathering real attention.
It’s that last point, climate change, which formed a major part of Biden’s 2020 presidential campaign, and so far he’s been delivering. Just days ago, Biden unveiled a plan to replace the government’s fleet of cars and trucks with electric vehicles assembled in the U.S. under a new “Buy America” executive order. He’s also vowed to spend US$2 trillion over the next four years to significantly escalate the use of clean energy in the transportation, electricity and building sectors.
But one of the most significant developments, which took place while he was still campaigning, was a private discussion with U.S. miners in late October, during which he pledged to support the domestic production of critical minerals by fostering an end-to-end supply chains in North America – a move designed to push the country’s car makers and other advanced industries towards full electric vehicle and low-carbon production by 2030.
The rise of China
For the last 20 or so years, China has been the overwhelmingly dominant figure in many critical minerals required by the U.S., with its low labour costs, substantially more relaxed environmental regulations and generous state subsidies.
One of the most prolific examples was Magnequench — a champion of North American rare earth production— which was sold to an investment consortium tied to Chinese state-owned metals companies San Huan New Materials and China National Nonferrous Metals Import and Export Company. Inevitably, Magnequench was shut down in the United States and moved to China, re-opening there in 2003.
Molycorp, which owned the prolific Mountain Pass rare earth mine in California was then left as the last remaining rare earths producer of any significant scale, but ultimately collapsed in 2015.
Since then, China — fuelled by its regulatory freedoms and booming semiconductor industry — has grown to account for 97 per cent of the world’s critical metal and rare earth production.
But, steadily, investors are cottoning on to the Biden-led shift back to North America.
“There is absolutely going to be what I call a great awakening in the U.S. and a fundamental shift towards what I call an electrified clean future,” said James Calaway, chairman of lithium-boron explorer Ioneer.
“You can’t help but realise that’s very bullish for global critical minerals . . . This is like waking up the big bad bear.”
Friends in patriotic places
The use of many critical minerals had already been increasing in the U.S. for the last two decades, more or less in line with the skyrocketing technology, auto, aerospace, oil refining, healthcare and defence sectors, which heavily depend on them. But how are Australian companies able to ride the coattails of Biden’s new policies?
In previous years, the focus had been on convincing America to invest in Australian assets. More recently, however, there’s been a greater emphasis on demonstrating to Washington the growing levels of Australian capital and mining knowledge being deployed in the U.S., and how that can boost the country’s goal of establishing an end-to-end critical metals supply chain.
If you’re a company like ASX-listed Tao Commodities (TAO) — which owns the Titan titanium and zircon project in Tennessee — that’s a pretty big deal.
Located just 15 kilometres from NYSE-listed Chemours’ Johnsonville pigment plant, one of the largest pigment plants in the world, the Titan project covers a significant area of prospective heavy mineral sands, which was increased by another 750 acres in January this year to total approximately 3,900 acres.
“We are very excited to be rapidly advancing a potentially massive titanium and zircon project — both critical minerals to the U.S. — on the doorstep of the U.S. titanium industry; a nation which currently imports almost all of their titanium requirements,” said executive director Anastasios Arima.
“Our initial drilling results were exceptional, and included thick zones of high-grade mineral sands containing critical minerals including titanium, zircon and the rare-earth mineral monazite.”
The U.S. is the world’s second-largest importer of titanium feedstocks, which are used extensively across a broad range of industries.
It’s estimated that each person in North America uses 10 pounds (roughly four kilograms) of titanium oxide every year in clothing, paper, paint, sun block and other everyday products. Titanium is also essential for high-tech applications that are vital for the U.S.’s economy and security — including in aerospace and defence.
This demand, combined with the closure of Iluka’s heavy mineral sands operation in Virginia in 2016 and the burgeoning ‘America first’ approach, means there is a huge misalignment when it come to the demand and supply balance of domestically sourced titanium in the U.S., with 95 per cent of feedstocks currently imported from overseas.
To that end, Tao Commodities is currently engaged in a phase three drilling program with the aim of delineating a maiden resource estimate and a subsequent scoping study, which will indicate just how much of the waiting titanium demand the company will be able to satisfy.
With an additional $3.6 million on its balance sheet as of the start of February, thanks to a number of institutional investors, Tao Commodities is well-placed accelerate exploration and development work at the Titan project.
“Tao is in an exciting phase of exploring the Titan HMS Project, which has the potential to be a very large, high-grade titanium and zircon rich mineral sand deposit located in Tennessee, U.S.,” said the company’s incoming Chairman, Todd Hannigan, who previously led Aston Resources.
“These titanium minerals are classified by the United States Government as critical minerals that are essential to the economic and national security of the U.S., with a supply chain vulnerable to disruption, and are a vital supplier to the world leading U.S. space and defence industries.”
In addition, Tao Commodities has recently commenced work on a partnership with a leading U.S. research institution to develop zero-carbon, low-cost titanium powders with the intent of becoming a world leader in zero-carbon titanium metal production, providing unique exposure to the development of the end-to-end critical minerals supply chain in the U.S.
News of Tao Commodities’ place in the shifting U.S. critical minerals environment has sent the company’s share price up more than 87 per cent so far this year, from just $0.27 on January 1 to $0.82 by February 16.
With a market capitalisation of just $50 million, there’s a lot of room for some serious growth which, by all accounts, the post-China world seems poised to deliver.
