This is my last column during the Biden administration. In a few days Donald Trump will be inaugurated, ushering in a new era in the US and for the world. Here’s a preview of what I’m thinking about from my office in Washington.
First, remember his “Drill, baby, drill” line? Turns out that’s not just for oil, but will also apply to minerals. We’re going to see a lot of progress on the mining front, with a Trump administration slashing the bureaucracy around getting a mine up and running.
Establishing a new mine in the US takes an average of 29 years, making it the second-longest process globally. Gaining approval to operate a mine requires navigating federal, state and local permits, while adhering to overlapping regulations. A single project may need as many as 30 permits, with many being repetitive.
Trump has announced the creation of a National Energy Council to address the bottleneck. The council will work with all departments engaged in the permitting, production, generation distribution, regulation and transportation of all American energy. “This council will oversee the path to US energy dominance by cutting red tape, enhancing private sector investments across all sectors of the economy, and by focusing on innovation over long-standing, but totally unnecessary, regulation,” Trump said.
I expect the new administration’s support for mining to go beyond American borders. It was actually during Trump’s first term that the Development Finance Corporation (DFC), the US government’s financing agency for projects overseas, was established. The DFC has provided finding for a number of mining projects in Africa, including SA, Mozambique, Angola and Uganda.
It was also during Trump’s tenure that the DFC issued its first equity into a mining project. The US government now has part ownership of the Rainbow Rare Earths project in Phalaborwa. Once you get US government equity it’s far easier to mobilise private capital. So more active US engagement on critical minerals projects internationally is good for the US and for emerging markets in Africa, Asia and Latin America.
Contrary to broader concerns, clean energy is still a priority for Trump. He has emphasised the need for an “all of the above” approach to energy, and is not planning to rely exclusively on fossil fuel development. It’s also not in America’s economic interest to hang the electric vehicle industry out to dry. In an era of power competition between China and the US, the last thing Washington wants is for China to saturate markets worldwide, crowding out American auto manufacturers for years.
Expect to see more political decisions made on the basis of minerals. You may have seen the news that Trump would like to buy Greenland and get the Panama Canal back. Neither suggestion has been well received by the respective governments. What’s Greenland’s allure? Fantastic rare earths deposits. And Panama? While the canal is a vital shipping route, the country also has one of the world’s biggest copper mines sitting idle.
Perhaps the most obvious point is that Trump and his administration nominees are extremely hawkish towards China. One of the most fascinating things to watch over the next four years will be how Trump engages with nonaligned countries that work closely with China where it’s economically sensible but also want to work with the US.
Saudi Arabia and India are two countries Trump deeply values. But they are both close to China and India is close to Iran. Chinese firms have invested billions of dollars into the minerals ecosystem in Saudi Arabia. Meanwhile, Indian Prime Minister Narendra Modi recently met Iranian President Masoud Pezeshkian and affirmed the importance of their bilateral relationship.
Trump is fiercely anti-Iran. My hope is that he develops a more even-tempered and strategic level of diplomacy to manoeuvre around the increasingly complex geopolitical world order. But grab your popcorn — we’re in for an interesting next four years.
• Dr Baskaran, a development economist, is founding director of the Project on Critical Minerals Security at the Centre for Strategic & International Studies in Washington, DC.
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