What a week.

We wanted to wait a moment (and not rush out one of the many “emergency” comment pieces), to let the dust settle and some appointments to be made before commenting on what the re-election victory of Donald Trump means for mining, energy and critical minerals.

There’s a lot — a lot — to unpack but, with the caveat that there are many unknowns, we have a number of signposts that we think point to a clear direction over the next four years.

The main question is how Trump plans to resolve the tensions in his expected political agenda, from securing supply chains to removing electric vehicle tax credits to allowing Tesla to stay competitive.

So, what now?

Trump is president, with Republicans taking both the House and Senate. The trifecta with a significant mandate.

This gives Trump and the Republicans two years to drive their agenda before the midterms in 2026 and political maneuvering will start in earnest to replace Trump on the Republican ticket.

Firstly, and importantly for investors in the industry with long-term horizons, we believe the election of Donald Trump signals a redirection, not a reversal, of US policies across mining, energy, tech and the energy transition.

Just as the Biden administration, in many ways, doubled down on Trump’s first term policies — from tariffs against China to securing supply chains — so, we expect the Trump administration to lean into similar policies.

But there will be some crucial differences.

Renewable Energy

Trump has pledged to redirect financing for what he described as “the green new scam” to roads, bridges and other infrastructure. Instead, he has promised to “drill, baby drill.”

The main target is the Inflation Reduction Act (IRA), which provides US$369m in direct funding and tax credits to clean energy development.

And the market has already responded:

• iShares Global Clean Energy ETF, which tracks renewables companies, fell 7% after Trump’s victory
• automotive forecaster GlobalData cut its outlook says lower oil prices and emissions standards could cut EV market share in the US by 15%-20%
• investment funds made an estimated US$1.2bn from shorting the share price of 20 renewable energy sector companies
• Heliene, a Canadian solar manufacturer, is reportedly pausing it’s US$150m plan to produce solar cells in the US
• NuEnergy is reviewing its plan for a US$300m recycling plant

If the energy transition slows, so to will demand for critical minerals to build it.

Wood Mackenzie estimates renewable energy deployment could fall 30% if the Republicans substantially overhaul US climate and energy policy. This would lead to a subsequent 30% drop in critical mineral demand

However, as we highlighted in our newsletter in 2023 — Will the Inflation Reduction Act survive America’s 2024 election? — to repeal the IRA in its entirety, even with the Presidency, House and Senate, would be extremely difficult. The reason is that there are so many competing factions and other political priorities; in particular, the amount of money that has flowed into Republican states from the IRA.

For example, at the start of Biden’s presidency America’s 2030 gigafactory pipeline was 360 gigawatt-hours. Today the 2030 pipeline is estimated to be more than x3 the size, at 1,310 gigawatt-hours. 

92% of the IRA’s investment has gone to Republican states, according to Benchmark Source.

Ahead of the US election, 18 Republican senators wrote an open letter urging House Speaker Mike Johnson to preserve some of the tax credits in the IRA. In response, Johnson reassured them he would use “a scalpel and not a sledgehammer.”

To put it bluntly, the IRA has put a lot of money on the table and it’s unlikely the Republicans will say, “No, thanks.”

However, it’s clear that some of the incentives and tax credits that underpin the IRA will be changed. This will probably have its biggest impact on electric vehicles (EVs).

Electric Vehicles

At the recent Republican National Convention, Trump promised: ““I will end the electric vehicle mandate on day one.”

The most likely targets for the end to this “mandate” include:

• strict new regulations by the US Environmental Protection Agency on vehicle emissions meant EVs were projected to make up make up 35-56% of auto sales in vehicles by 2032
• IRA tax credits worth US$7,500 for each electric vehicle if components and assembly are sourced in the USA

There is, however, a significant tension to Trump’s pledge — namely, Elon Musk, CEO of Tesla, who gave the president significant support in the election campaign and has reportedly been influential in some of the cabinet picks. Tesla stock surged more than 30% after the election result was declared. 

We think we know how this tension will be resolved.

As we highlighted in our analysis — US miners vs US automakers — the mining industry and automakers in America are on a collision course over supply of critical minerals for electric batteries:

• US miners want tariffs on Chinese EVs
• US automakers want easy access to cheap critical minerals

Biden has already announced a 100% tariff to stop cheaper Chinese EVs from getting into the country, a move we expect Trump to uphold. But what about the critical mineral supply chains that China dominates?

Removing the Inflation Reduction Act tax credit for electric batteries (that requires an increasing percentage of an electric battery’s critical minerals to be extracted or processed in the US or a free-trade agreement partner) will reduce the incentive for US automakers to invest in and source minerals from domestic mines, and instead be able to source from cheaper China-owned mines

And there were warnings from the automakers against the tax credit mandate:

• Tesla warned they may have to raise prices on their EVs and, on an earnings call in July 2024, Elon Musk said removing the US$7,500 incentive would have “some impact” on Tesla, “but I think it would…[only] hurt Tesla slightly,” he told analysts. “Long term, [it] probably helps Tesla.”
• Ford announced a direct stake in an Indonesia battery-nickel plant, with Indonesia’s PT Vale and China’s Huayou Cobalt — just days after the proposed FEOC guidance released in December 2023 and despite threats of investigation by Congress
• the US Alliance for Automotive Innovation is lobbying against an “overly broad” application of FEOC, urging for vehicles with insignificant traces of Chinese material to be eligible for the tax credit

However, what Trump may take with one hand, he promises to give back with the other.

Mining

The incoming Trump administration has made big play of their plan to roll back regulation, including environmental permitting, to facilitate the development of new mines in the country.

Much of this deregulation is aimed at fossil fuels (oil, gas and coal), but will significantly impact the mining sector.

Again, in many ways this will be a continuation of the first Trump and Biden administrations which saw a significant push to support new mines with funds through the Department of Energy and Defence (eg. a US$2.26 billion loan for Lithium Americas to build Nevada’s Thacker Pass lithium mine).

The important difference is that Biden focused on mines outside of the US, in jurisdictions with free trade agreements, such as Australia. 

We expect Trump, similar to his first term when he used the Defence Production Act in 2020 to declare a national emergency to address reliance on foreign minerals, to focus on developing projects based in the US, or “reshoring.”

For example, Trump already has promised to bring a key mining region in Minnesota “roaring back to life.”

“In particular, I think you can expect the [Trump] administration to focus heavily on domestic onshoring of all parts of the mineral supply chain, especially mineral extraction”

— Gregory Wischer, founder of critical minerals consultancy Dei Gratia Minerals, told Mining Technology

The US currently has the second longest mine development times in the world, at almost 29 years on average from first discovery to first production, according to a recent report by S&P Global.

But, without the electric vehicle tax credit incentive for US automakers to buy US-sourced critical minerals, how will miners compete with cheaper critical minerals from China?

Tariffs on critical minerals

We expect the IRA EV tax credit to be replaced with tariffs.

Trump has pledged all tariffs of 10%-20% on all imports, with additional tariffs of 60%-100% on goods brought in from China.

We would be very surprised if this did not impact critical minerals as well.

For example, Donald Trump introduced tariffs on natural graphite from China in his first term, and Joe Biden reinstated them in 2024 — a move welcomed by the North American Graphite Alliance.

And, crucially, the difference between tariffs and the EV tax credit in the IRA is flexibility. 

For example, as we warned in our newsletter — Will the US and Indonesia sign a free trade deal? — it would be very difficult to agree a broad free trade deal with Indonesia just to allow nickel imports to qualify for the tax credit. But negotiations over tariffs could be much more targeted and easier to negotiate.

Conclusion

“Across the country 500,000 miners stand ready to do what they have always done: deliver for our country. Together with the next Trump administration and Congress, we can increase America’s competitive standing on the global stage, ensuring that made in America also means mined in America”

— National Mining Association Congratulates President-Elect Trump and Vice President-Elect Vance

The US National Mining Association lays out three key policies that are needed:

• establish a central point of coordination for US mineral policy to align agency efforts and support domestic projects by ensuring mine approvals and access to mineral-rich public land.
• implement mine permitting reform to streamline processes, uphold mining laws, and set limits on litigation delays, cutting down the 29-year average from discovery to production.
• counteract price suppression from Chinese and Russian-controlled minerals through price support, strategic stockpiling, and enhanced tax credits to strengthen domestic production and ensure effective policy implementation

The Association acknowledges the Biden administration has taken “some promising steps” to address mineral security, but more needs to be done.

Maybe best thought of as a refining of policy.

If you try to cut out the political and media noise, there is significant overlap and continuation in policy towards the mining industry across Trump’s and Biden’s administrations.

We expect this to continue in Trump’s second term, including with international initiatives such as the Mineral Security Partnership.

And this will not be the end of the energy transition — far from it, we expect nuclear energy to boom and many states will be reluctant to relinquish their new momentum with electric battery gigafactories — but the pace will likely slow.

However, instead of the Democrat’s plan for a federally-supported renewable and EV industry boom fueled by almost half-a-trillion dollars in the IRA, the Republicans plan to encourage the domestic private sector through domestic deregulation and international tariffs.

Of course, much of Trump’s agenda will look a lot different once the rubber meets the road, from litigation to land leases, China’s export restrictions to the response by private finance.

But the goal is the same: to resolve the central, long-term crisis for the US to secure critical mineral supply chains.

Biden’s Inflation Reduction Act laid the groundwork for substantial funding opportunities in American mining, and Trump’s administration is poised to supercharge these initiatives by dismantling regulatory hurdles that have constrained their potential.