One-Two Combo from Trump this week with Taxes & Critical Materials

By Peter “@Newton” Bell, 21 December 2017

Trump’s tax policy may be getting all the media attention right now, but it’s worth watching an Executive Order he made the same day that calls for a Federal strategy on critical materials (https://www.doi.gov/sites/doi.gov/files/uploads/2017minerals.eo_.pdf).  Any real action to reduce US reliance on foreign sources of critical materials risks upsetting the status quo in the global economy, which is a non-starter for most politicians but may be the perfect point for Trump’s next attack.  Note also that the tax policy looks to have been at about 60% strength but this critical materials policy is at 100%, which is textbook for a jab-cross combo (https://en.wikipedia.org/wiki/One-two_combo).

A new mandate to support projects that make the US economy less dependent on foreign sources of critical materials could provide a huge boost to the USA driven by new technology, new supply chains, and new jobs.  A Federal mandate to support domestic production of critical materials may come together surprisingly quickly based on foundations set by Alaska Senator Lisa Murkowski and others over recent years.

Trump’s order on critical minerals was supported by a stunning report from the USGS (https://pubs.usgs.gov/pp/1802/pp1802_entirebook.pdf) that provides the first comprehensive update on US mineral resource landscape since 1973.  Say what you will about the US government, but this report reads like mana from heaven for speculators as it details the supply constraints for niche materials like cobalt, tellerium, and more.  Graphite is listed as one of 23 materials recognized as critical to the “national economy and national security” and is one of only 4 materials for which the U.S. is 100% import-dependent.

It is surprising to hear that such a widely-used material as graphite is not produced in the USA. In conversation with Mr. Anthony Huston, President & CEO of Graphite One (TSXV:GPH), he told me that natural graphite production stopped in 1991 – not in the 1950s as the USGS article says.

Mr. Huston also said “there has been no US flake graphite produced for the past 27 years but there is a growing need for technology-grade graphite to service the lithium-ion battery, energy storage, and mobile technology manufacturer.”  That story is all about large flake graphite, whereas most of the graphite used by industries in the United States today is synthetic, which has a much higher price than natural flake graphite and lower electrical conductivity.

There are a lot of potential sources of graphite out there, but it’s always a challenge to permit and process economically.  A clear goal of this new Executive Order is to expedite production, processing, and domestic refining of critical minerals.

Graphite One is positioning itself as part of public discussion on the topic with a news release supporting the action (http://www.graphiteoneresources.com/news/news-display/index.php?content_id=267).  It is absolutely imperative for Graphite One to get on the right side of these tectonic shifts in the political landscape for resource project development in the domestic USA.

Graphite One produced their inaugural PEA in June, 2017 and established that Graphite Creek has huge economic potential. Since it is located in Alaska, the state’s natural resource investment company AIDEA is in the mix and I suspect they are hungry for a win. A new mandate from the Federal level may embolden the State of Alaska to aggressively support development of critical materials projects in the state.

With a market cap of ca. $20 million, Graphite One stands to benefit greatly from new sources of funding and accelerated timelines for government review of the Graphite Creek Project. The time is ripe for US government to get out of the way and start pushing to make domestic production of critical materials a reality and stands to lead from the front of global economy by doing so.

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