According to Fastmarkets, an analytics firm, a $2 trillion infrastructure measure proposed by President Joe Biden would help establish bull conditions in commodity markets, especially for copper, lithium, cobalt and steel, which are key materials needed for the energy transition.
Fastmarkets metals & mining expert Thorsten Schier stated that in comparison with the package proposed by Obama in 2009, the infrastructure plan proposed by Biden could be more beneficial to the metals market, for reasons beyond its large size. Schier explained that it created the potential for strong demand in the near future, as it did not need shovel-ready projects.
Fastmarkets, which offers market reflective price data as well as insights and news for the metals and mining sector, noted that Biden’s measure established strong bullish factors not only in the key metals required for the energy transition but also in scrap prices and steel. One trillion is equivalent to a net demand of about 50 million tons of steel.
Schier also added that the pledged creation of an office in the Department of Commerce, whose work would be to support and monitor the domestic production of critical materials and goods, would only be a benefit to U.S. facility owners.
However, the proposal faces some opposition from a group of Democrats trying to support placements in the coal industry. The group is led by Senator Joe Manchin of West Virginia. Schier noted that the unions which have backed Biden may present a similar threat and may also oppose the critical green agenda, as many fear that the green energy economy will have fewer non-union jobs. This may present a problem to Biden, who has vocalized his support for unions.
The analyst also mentioned that political guile and policy, in addition to money, will be needed to bring battery and electric vehicle manufacturing to the United States rather than the burgeoning markets of Asia. In 2020, China sold about a million more electric vehicles than the United States. Globally, China appears to be dominating the battery manufacturing supply chain, with Europe trailing not far behind.
The analytics company predicts that real growth in the U.S.’s electric vehicle industry could strain the supply chain, which is currently focused on Asia and Europe. It notes that this strain could test the supply chain’s viability as well as the elasticity of demand, while also causing a huge surge in prices.
This expected boom in the energy metals comes at a time when precious metals, such as gold, have also been enjoying record high prices, thereby earning mining firms such as Excellon Resources Inc. (TSX: EXN) (NYSE American: EXN) (FSE: E4X2) decent returns for their efforts.
NOTE TO INVESTORS: The latest news and updates relating to Excellon Resources Inc. (TSX: EXN) (NYSE American: EXN) (FSE: E4X2) are available in the company’s newsroom at https://ibn.fm/EXN
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