The coronavirus may be wreaking havoc on the global economy, but when the dust settles, moving forward will be all about access to critical metals, from the 5G war to every high-tech energy transition in the pipeline.
Critical metals are a big part of the difference between global dominance and … second place, at best.
As things stand, China is winning because it has supreme access, while the United States has smaller mineral pockets.
So, when a Canadian junior miner emerges as the owner of three properties in Ontario that could provide the only new supply of one of these critical metals, North America sees hope.
The metal is cesium, and the miner is Power Metals--a little-known company with a big-name geologist that just put itself on the critical metals map.
The 5G revolution, American military defense, healthcare and even time itself are dependent on this one critical metal that China monopolizes and that the U.S. is desperate to get more of.
There are only three cesium mines in the world, with China controlling the supplies entirely. That means that it's all about new supply.
America's Belated Desperation
China produces roughly 70% of the world's rare earth minerals. It also supplied about 80% of America's rare earth imports in the three years ended 2018, according to the U.S. Geological Survey (USGS).
While China was pushing ahead at full speed, America was caught sleeping at the wheel. Indeed, at the height of the trade war, China indicated it might restrict the export of some rare earth minerals.
Now, it's past time to wake up.
In May 2018, the United States Department of the Interior included lithium, cesium, and tantalum on its list of Critical Minerals. Now, Trump is bent on fostering domestic production and forming partnerships with other countries for new supply.
Drones are being developed to scour the land for potential critical mineral occurrences, and in late April, the U.S. State Department aided the launch of an online tool designed to help countries with critical mineral resource potential to develop those assets for U.S. investors, Bloomberg reported.
It's an unprecedented effort to help remove the risk of investing in certain venues and to "stake American's claim to many of the world's rare-earth minerals". And the point is to find resources in countries where investors may find the setup.
The problem is that the bulk of new critical metals supply will be in venues that are risky for investors.
"Either the world will not get the minerals it needs in order to fuel energy transition technologies," or "that investment would only come from those who are less concerned about governance issues, transparency, corruption, environmental standards and best practices," Francis Fannon, the U.S. assistant secretary of state for energy resources, told Bloomberg in an interview.
But for cesium, there is hope that it's not a risky venue that needs a special "toolkit": It's Canada--home of some of the world's best-in-class junior miners who forge new exploration paths before they are scooped up by larger companies.
Cesium: Beyond Critical
Cesium is described by the German Institute for Strategic Metals (ISE) as "the most electropositive of all stable elements in the periodic table", and the heaviest of the stable metals. Cesium is "extremely pyrophoric, ignites spontaneously when in contact with air, and explodes violently in water or ice at any temperature above -116 ° C".
But the industry would describe it very differently.
There won't be a 5G revolution without this metal. It's also critical to the healthcare industry which uses cesium compounds in medical imaging, cancer therapy, positron emission tomography (PET) … just to name a few. For everything from catalyst promoters, glass amplifiers, photoelectric cell components, crystals in scintillation counters and getters in vacuum tubes, cesium is critical.
Much cesium demand also comes from the oil and gas industry, which uses cesium formate brines in drilling fluids to prevent blow-outs in high-temperature, over-pressurized wells.
In terms of world dominance, the "cesium standard" is the key. This is the standard by which the accurate commercially available atomic clocks measure time, and it's vital for the data transmission infrastructure of mobile networks, GPS and the internet.
That means it has serious defense applications as well, including in infrared detectors, optics, night vision goggles and much, much more. A cesium laser has even been invented for use in missile defense and other technological applications.
Cesium is so obscure that it's nearly impossible to track its real market price.
It's strategic in and of itself, but its rarity makes it even more critical.
In the entire world, there are only three pegmatite mines that can produce cesium: one is the Tanco mine in Manitoba, the second is the Bitika mine in Zimbabwe, and the third is the Sinclair mine in Australia. China controls them all, beyond its own borders. Tanco and Bitiki are no longer producing, but Sinomine Resources Group holds all their cesium ore stockpiles.
There are 16 metals in total that are absolutely critical to high-tech industries, military applications and telecommunications--and China controls the supply of every single one because it controls 96% of production.
That includes cesium, for which China has a monopoly on stockpiles, mines aren't really producing anymore, and the United States has none, leaving North America's only hope in Canada.
Other companies betting big on critical metals:
Teck Resources (NYSE:TECK, TSX:TECK)
Teck could be one of the best-diversified miners out there, with a broad portfolio of Copper, Zinc, Energy, Gold, Silver and Molybdenum assets. Its free cash flow and a lower volatility outlook for base metals in combination with a potential trade war breakthrough could send the stock higher in H2 of this year.
Teck's share price stabilized last year and many investment banks now see the stock as undervalued. Low prices for Canadian crude and disappointing base metals prices weighed on Q4 earnings.
Despite its struggles, however, Teck Resources recently received a favorable investment rating from Fitch and Moody's, and will likely benefit from its upgraded score. "Having investment grade ratings is very important to us and confirms the strong financial position of the company," said Don Lindsay, President and CEO. "We are very pleased to receive this second credit rating upgrade."
Turquoise Hill Resources (NYSE:TRQ ,TSX:TRQ)
Turqouise is a mid-cap Canadian mineral exploration and development company headquartered in Vancouver, British Columbia. Its focus is on the Pacific Rim where it is in the process of developing several large mines.
The company mines a diversified set of metals/minerals including Coal, Gold, Copper, Molybdenum, Silver, Rhenium, Uranium, Lead and Zinc. One of the fortes of Turquoise hill is its good relationship with mining giant Rio Tinto.
Turquoise has seen its share price languish last year, and the successful development of its world-class Oyu Tolgoi project in Mongolia is of utmost important to the future of this miner.
Pretium Resources (NYSE:PVG, TSX:PVG)
This impressive Canadian company is engaged in the acquisition, exploration and development of precious metal resource properties in the Americas. Pretium has an impressive portfolio and if you can catch the stock while the price is right, there could be huge opportunity for upside. Additionally, construction and engineering activities at its top location continue to advance, and commercial production is targeted for this year.
With Pretium's variety of assets, this mining giant is a key figure in Canada's resource realm. Investors know a good thing when they see it and have definitely taken note of this company's ambitious and forward-looking drive.
Magna International (NYSE:MGA, TSX:MG)
Based in Aurora, Ontario, Magna is a global automotive supplier is gutsy and innovative--and definitely tuned to the obvious future--clean transportation. A great catalyst is its development of a combo electric/hydrogen vehicle--a fuel cell range-extended EV (FCREEV). It's not going to produce them (for now, at least) but plans to use the model to show off its engineering and design prowess and produce elements of the electric drivetrain and contract manufacturing. It's insightful, forward-thinking and smart value/low cost for shareholders.
Agnico Eagle Mines Ltd (NYSE:AEM, TSX:AEM)
Canadian based gold producer, Agnico Eagle Mines is an especially noteworthy company for investors. Why? Between 1991-2010, the company paid out dividends every year. With operations in Quebec, Mexico, and Finland, the company also is taking place in exploration activities in Europe, Latin America, and the United States.
While Agnico primarily focuses on gold, it made this list because it's a prime example of sustainability and environmental consciousness, and that means everything in a world rapidly shifting away from traditional mining.
By. Charles Kennedy
Charles is a writer for Oilprice.com More