With the US election now over, the resources world is trying to understand what it will mean for the sector
The difficulty comes in ascertaining exactly what this second Trump presidency will be for he has offered little policy other than soundbites about “tariffs on China” and “drill baby drill”.
The policy vacuum will have to be filled at some point before his inauguration in January (hopefully) but until then everyone is left guessing, imagining or dreaming depending on your political leanings.
Traditional conservatives will see the resounding victory of the Republican nominee Donald Trump as boon for business. Received wisdom says his presidency will fuel economic activity, increasing investment and growth. Much of those assumptions revolves around the usual discussion about cutting red tape and enabling. The problem is, having confounded the Left, Trump may do the same to his allies on the Right.
Commentators have put Trump’s win down to his focus on cost-of-living pressures but, again, he was light on policy details about how he would fuel economic activity, choosing to focus on immigration rather than how he would enable free market growth.
In fact, the few economic policy ideas he has raised are the opposite to the traditional neoconservative free market policies and instead focus on protectionism.
Counter-intuitively, it may be that when it comes to critical minerals in particular, Trump’s approach is not that different to the policies of Joe Biden.
The brief conversations I have had with individuals in US government have long suggested the push towards mineral security is bipartisan and it is not hard to draw similarities between Biden’s IRA, tax credits for domestically sourced EVs and his own China tariff increases, and Trump’s plans.
Successful slashing of red tape would provide a boost to US-focused critical minerals miners who have found that despite encouragement from Washington, there is still plenty of opposition from other interest groups for mine development.
These opponents include the usual environmental and indigenous groups – as evidenced by the lawsuit brought against the approval granted for Ioneer Ltd’s Rhyolite Ridge project in Nevada – but there is also an element of Trump supporters who are voicing their hostility towards development.
In the wake of the devastating Hurricane Helene weather event, conspiracy theories ran hot in online communities that the Federal Government had geoengineered the hurricane to clear communities and seize land to build lithium mines and plants. Several posts on X and TikTok – some with millions of views – claimed towns such as Chimney Rock, North Carolina were being cleared to make way for lithium mines. It appears faintly ludicrous to anybody within the industry but as January 6 showed, even Trump can struggle to contain his supporters once a conspiracy theory builds momentum. In this context, “drill baby drill” may not be a strong enough policy document.
In the gold space, the spot price dropped $US50/oz in the weeks following the election but if his last term is anything to go by, Trump could be good for the gold price. He has made ending the war in Ukraine a priority, but his chaotic style could provide the geopolitical uncertainty in which gold markets usually thrive.
You will tell from my comments I am highly sceptical about Trump’s ability or willingness to effect economic growth in the resources space. However, like his last term, it is impossible to say with any certainty. Strap in for the ride.
One of the reasons I’m sceptical about how much change Trump will effect is because I don’t subscribe to the great man of history theory that it is individuals who change the course of history, not much greater, more complex factors. In the counter to the great man theory, Trump is the results of wider trends, not the instigator of them.
It is a theory the resources sector is trying to shake. Many companies are defined by the men (99.9% of the time it has been men) who either founded them or took the reins at a crucial time. The company’s success is then put down to the leader’s force of personality, drive and will.
This was undoubtedly the case 20-30 years ago, but in modern times the most successful companies are built with a variety of contributors, bringing different skills sets, experiences and background. Great leaders still remain – Andrew Forrest and Gina Rhinehart the most prominent – but, just as Rupert Murdoch is one of the last remaining media moguls, the archetype is waning.
Part of the problem is the risk associated with having so much importance contained in one individual. If the individual falls, the company is dragged down with them. It could not be claimed to be good risk management.
For all Chris Ellison’s success and dynamism in the company he built, there must be more than a few shareholders and employees wishing Mineral Resources Ltd didn’t commit so wholeheartedly to the great man theory.