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Message: Biden administration weighs price support for US critical minerals amid Chinese pressure

Thanks, JD.  This would seem to be obvious:  "Chinese oversupply has crashed the price of lithium, nickel and other minerals key to the clean energy transition, making it harder for owners of U.S. minerals projects to secure financing despite grants and other support they’re receiving from President Joe Biden’s administration"

 

To secure financing, minerals project owners typically need to sign agreements with potential buyers such as automakers or battery cell manufacturers that show they will generate enough revenue to pay back investors.

 

But those customers have been loath to sign long-term purchase agreements with U.S. suppliers given the possibility that mineral prices will keep falling, and the fact that American-made minerals are more expensive than Chinese ones to begin with, companies say. One estimate last year put the price of North American graphite at more than double that of imported material, for example.

“You can’t have the facility built or the money to buy the equipment without having commitments from customers because you can’t get the financing without it,” said Chip Dunn, chair of Anovion Technologies, which is developing a $1 billion synthetic graphite plant in Georgia. “This is where the government needs to play a role.”

 

 

U.S. producers and government officials have accused China of subsidizing its producers to flood the global market with cheap minerals produced with lower social and environmental standards. A top State Department official, Jose Fernandez, told POLITICO this month that China is engaged in “predatory pricing” to frustrate U.S. efforts to develop its own high-standard sources of minerals.

 

American projects also face significantly longer timelines to get to market due to permitting delays. And some U.S. minerals suppliers argue that the Biden administration’s rules implementing Inflation Reduction Act tax credits for electric vehicles and clean energy manufacturing have left too much leeway for upstream customers to continue purchasing minerals from China.

 

“High interest rates, inflationary pressures and oversupply of minerals from China put a lot of additional burden on these companies, who have the monumental task of raising or finding private capital for three quarters of these investments,” 

 

Well, duh!

As I have been saying for some time now, the dismal price of lithium in the market is a 2 edged sword.  It has certainly put LAC's and LAAC's share prices in a tailspin, sticking with pilot terminology it actually has been more of a "Stall". 

 

Now for those who have not experienced training in aviation a "Stall" isn't the same as it is when you are smoking a brisket and the meat goes into the "Stall" and the temperature just doesn't rise for an extended period of time and the cook has to deal with significant frustration waiting for the brisket to finish cooking.  It also doesn't mean the same thing as when a tennant tells the landlord that "my check is in the mail".   For a pilot, the term "Stall" means that his or her airfoil is no longer producing lift and the plane is literally falling in the sky, like someone in an elevator when the cable breaks.

 

Ok, that describes the bad side of things, but what about the good edge of the sword?  Well, it is only "good" for those companies, like LAC, who are much farther along in the "development stage" than all of those poor newbies who truly face financial ruin because of the low lithium prices.  That doesn't mean that it isn't a blow to LAC and LAAC as well, but they are more likely to weather the storm than all of the huge number of wannabee newbies to lithium mining who are faced with this terrible development right when their CEO's and upper executives are out hustling in the market place for investors.

 

Just to make matters worse for Wannabees in the world of lithium mining, and for that matter for the world of any mining here in the U.S., there is the added fly in the ointment of "How will a change in administrations affect the climite for both mining companies deep in the development stage, those near the end of development and those in production?"  How indeed?  Only "the Shadow knows" and he/she/it is not telling.

 

We are deep in "the FOG"! 

 

 

Same song, 97th verse.  Remember "99 Bottle of Beer on the Wall" from High School days?  A song that never ended until the bus trip was over.

 

 

Okiedo

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