This week’s column: Trump wants Greenland’s rocks, Indonesia is destroying its reefs, and Burkina Faso nationalizes more mines.
Let’s get after it!
“Digging for Value, One Story At A Time.”
We’ll Take Greenland …’s Rock
Trump wants to buy Greenland and make it his Louisiana Purchase. But if he can’t do that, maybe he’ll buy Greenland’s rocks.
Critical Metals Corp. (CRML) – no bonus points for company names in mining! – announced that it has “met the minimum requirements” for a $120M loan from the U.S. Export-Import Bank (EXIM) to fund its Tanbreez rare earth project in southern Greenland.
Basically, all you need to do to qualify for the loan is show that you “compete with China” on rare earths. Easy enough?
“EXIM, acting as the US government’s export credit agency, said in the letter that CRML qualifies for its loan program since its business competes with China.
Rare earths — a group of 17 minerals used in high-tech industries ranging from electric vehicles to defense systems — have become a focal point in the recent Sino-American trade clash, given Beijing’s leverage as the leading producer and exporter to Washington.
China currently controls roughly 60% of rare earth production and nearly all of the processing capacity worldwide. As of 2023, its total mine production was 240,000 tonnes, nearly six times that of the US. Between 2020 and 2023, China accounted for about 70% of America’s rare earth imports.”
This is a good start. If CRML turns Tanbreez into a mine, it would generate 425,000t/year of REE concentrate. And that’s only assuming it mines 1% of its host rock.
I’m kind of pissed though because I thought Trump was “Pro America” and “America First” and here we are, investing money outside the United States for critical minerals, when there are countless projects inside the US that could use the funding.
Don’t get me wrong, I get the idea. It’s a good first step if you’re Trump and your ultimate goal is to buy Greenland and give everyone a Trump Mobile phone.
But I don’t know, what about Idaho Strategic’s (IDR) Lemhi Pass REE asset in Idaho? That seems to be both a) America-First and b) helping us compete against China in REEs.
Also, it’s not like Greenland is this beacon of mining prowess. There are two small mining operations in the entire country. Two. The article also mentions that, “despite growing interest, Greenland’s mining sector has seen little progress in recent years due to limited investor interest, bureaucratic challenges and environmental concerns.”
Even if CRML builds the mine, they still need some place to process it, ideally outside China.
“As for Critical Metals, the company would still have to build a processing facility, and its representatives said their goal is to process the material inside the US. The company had previously applied for funding to develop a processing facility from the US Department of Defense, but the review process stalled ahead of Trump’s inauguration.”
So I guess all of this just means long MP Materials? (not advice!)
Do You Want EVs or Marine Life?
The consensus view on “Electrification” is that it:
- Is good for the environment
- Heals the planet by reducing our reliance on “dirty” fossil fuels
- Makes you a better person
- Allows you to judge others while projecting a sense of superiority
But the reality resembles the Trolley Problem, where you either save three baby turtles or blow up a coral reef.
In our case, it’s the decision between “mine nickel so we can all drive EVs” or “save the marine life in Indonesia.” From the BBC:
“Stark images, captured from a drone by environmental campaigners and shared with the BBC, appear to show how nickel mining has stripped forests and polluted waters in one of the most biodiverse marine habitats on Earth.
The Raja Ampat archipelago – a group of small islands in Indonesia’s Southwest Papua Province – has been dubbed the “Amazon of the Seas”.
But mining for nickel – an ingredient in electric vehicle batteries and in stainless steel – has ramped up there in recent years, according to the organisation Global Witness.
In a move that was welcomed by campaigners, the Indonesian government this week revoked permits for four out of five mining companies operating in the region.”
This is something that Ernest Scheyder addressed in his book The War Below. Electrification isn’t some blanket “global good” for the environment. There are real consequences for Going Green, and end consumers (you and I) don’t see those consequences.
For instance, Tesla doesn’t say on its website, “Hey, you’re saving $100 a month by not buying gas. But you’re also killing four sea turtles a month sooooooo enjoy!”
It’s also why I’m very skeptical of deep-sea mining.
“Increasing demand for so-called critical minerals is shaping economic decisions around the world. It was the driving force for President Trump’s recent executive order to jumpstart the mining of metallic nodules from the deep sea in international waters. It is a move that China has called illegal.
Dr Erdmann pointed out that balancing economic growth with environmental protection was a particular dilemma for Indonesia. “It has a lot of nickel – one way or the other, some of it’s going to come out of the ground,” he said.”
Lol at China calling a mining practice illegal. As if they are the pinnacle of Ecological Best Practices.
Nickel is a microcosm of all electrification metals: copper, graphite, zinc, iron ore, etc. All these metals face the same challenge that Dr. Erdmann explains:
“Mining is always going to be environmentally impactful and we all tend to think that electrification is a good idea. But what is the acceptable damage that we’re willing to see?”
It’s a fantastic question.
“Look At Me … These Are Mine Now.”
So, Burkina Faso has decided to celebrate its status as Africa’s fourth-largest gold producer by doing what any self-respecting government with a sudden urge for “sovereign ownership” would do: it nationalized five gold mining assets and handed them over to its new state miner, Société de Participation Minière du Burkina (SOPAMIB).
Have you ever played Monopoly with a toddler? It’s kind of like that. You’re crushing them at Monopoly. And instead of playing fair and waging a comeback, they flip the board, scream unintelligibly, and say, “This game is stupid! All these hotels are mine now!”
The mines in question were previously owned by subsidiaries of Endeavour Mining and Lilium, whose executives are probably now asking ChatGPT, “how to file an insurance claim for expropriated gold mine” or “best countries for mining where the government won’t take your stuff.”
The assets included two operating gold mines and three exploration licenses. Good on you, Burkina Faso, you can have your cake and eat it, too.
Burkina Faso’s logic is simple: gold prices are up 27% this year, so why let foreign companies enjoy all the fun when you can just, you know, take the mines and keep the profits?
I love how the article ends with, “yeah so investors might not like this idea of nationalization and it could lead to investors leaving with their money.”
“Talk of nationalisation in African mining sectors signals serious warning signs for investors and governments alike. Economist Léonce Ndikumana, co-author of “On the Trail of Capital Flight,” highlights how natural-resource wealth can trigger both foreign direct investment (FDI) inflows and sustained capital flight—especially in countries with weak institutions.
Also, the UNCTAD-backed analysis shows that resource-rich African nations often suffer from capital leakage even as they receive foreign investment, a pattern worsened by abrupt policy shifts or nationalisation.”
No kidding.
There are two ways to compensate for this risk:
- Don’t invest where Burkina Faso can take your assets
- Include some “Nationalization Tax” in your NPV model where there’s a certain percentage probability that the government seizes your asset and it becomes worthless.
US investors buying Chinese ADRs should know this exercise well.
I say this a lot around here, but wow, is mining hard.
