One of the earliest tangible impacts of the arrival of the new Biden administration mining was the rescinding of publication of an environmental report relating to the multi-billion dollar Resolution copper project in Arizona.
The idea of “rescinding a publication” is a typical word-wrangle from a culture that’s increasingly bent on mangling its own language, but what it means essentially is that although the US Forest Service did in fact publish an environmental report into Resolution, it’s now saying that it didn’t – and that’s the important bit.
Because under a deal struck during the Obama administration, Rio Tinto was allowed to swap certain parcels of land into the Resolution tenements, in exchange for swapping out others, subject to the publication of an environmental report by the Forestry Service.
Handily for US policy-makers neither of these companies are American, so their lobbying efficacy is somewhat diminished.
Look at it then as a trial run for the Biden administration in its approach to mining. By “unpublishing” a document the President’s new secretary of agriculture, Tom Vislack, who oversees the Forestry Service as part of his role, gets to test the water.
The unpublishing effectively halts the project with a minimum of fuss, since publishing either the same or a revised document effectively lets it go ahead again. It’s the type of system-gaming that politicians love the world over, and do so well.
So far, the reaction has been relatively muted.
Rio Tinto put out a non-committal statement full of the usual bland corporate-speak, BHP Group didn’t comment, and a representative of the local Apache tribe was quoted as saying that a decision that prevented “foreign” mining companies from desecrating tribal land was all to the good, Copper market commentary focussed mainly on Rio’s ongoing issues with another of its major developments, the giant You Tolgoi mine in Mongolia.
There is significant local support for Resolution too, in the context of the employment it will bring, but local mayors and community leaders aren’t yet getting much of a hearing. Safeguarding blue-collar jobs was more of a Trump talking point and doesn’t play well in the land of Alexandria Ocasio-Cortez, where identity rather than class is key in the language of lifting up the downtrodden.
In the medium to long-term implications will be significant. President Biden has talked a very good game on the environment. On the one hand that makes digging up thousands of acres of US countryside less than desirable.
On the other hand, the materials to fuel a green revolution have got to come from somewhere, and is it really right that the US outsource the environmental destruction that goes with mining to poorer, third world countries? It’s not an issue that would particularly have troubled the Trump administration, which was more focussed on the blue-collar jobs such projects bring, and hence its publication on Resolution in its final days.
But for Biden, trying to balance competing elements inside his own progressive wing, while also endeavouring to appear pro-business and pro-America is going to be tricky.
Can the same administration really veto huge mining projects that will provide essential materials for electric vehicles whilst also highlighting the threat of relying on imports from China and elsewhere?
Actually, the answer may well be yes. Politicians are very good at kicking cans down the road, and in the case of Resolution, the Democrats appear to have it down to a fine art. The environmental publication is the perfect device.
In the meantime, a company – not by co-incidence homegrown in America – which already has several copper mines up and running across the US, Freeport McMoRan (NYSE:FCX), is likely to apply for permission to expand operations at three locations. And because these mines are already permitted for production, overall opposition to these plans is likely to be much less significant.
So US copper production will continue to grow, to a degree.
The real test will be when Antofagasta (LON:ANTO), a London-listed company run out of Chile, tries to permit its huge Maturi project in Minnesota. This project made considerable headway under President Trump.
The betting now is that under President Biden, it won’t.