Tariff Windfall: Why Miners with US Operations | Australian Markets

Remember final yr’s market rally when Trump received the US election regardless of utilizing tariffs as his main election catchcry?

How occasions have modified!

The market is now regurgitating on something to do with the T-word.

Markets have change into extraordinarily short-sighted and reactionary.

That’s why I wouldn’t be stunned if market sentiment shifts wildly within the reverse (constructive) direction quickly.

Anyway, how does all this relate to a potential alternative I’ve uncovered within the commodity space?

Identifying A Rare Winner from Tariffs

Given that America imports most of its uncooked supplies, tariffs will raise the prices of metal, copper, and aluminium.

That’s dangerous news for American producers.

And as materials prices rise, producers will go these prices on to American customers.

But will the US shopper be capable of take up these larger prices?

Unlikely.

Much of the worldwide financial system remains to be in a ‘cost-of-living crisis’, the place rising rent, real estate, food, and so on., are out of whack with muted incomes.

That contains the US financial system.

So, there’s NO room for customers to bear even larger prices.

And that’s the main fear for markets…the US is the world’s largest shopper financial system, and tariffs might power it to tighten its purse strings even additional.

And that received’t be good for world growth.

So, it is likely to be laborious to assume of any constructive investment thought from Trump’s tariff warfare. Other than shorting the market, of course!

But right here’s one ‘long’ thought:

The American Mining Advantage

Have you ever thought-about how mining stocks would possibly fare towards all this tariff bluster?

Specifically, firms with operations INSIDE the US.

To clarify what I imply… Imagine you own a copper mine within the US.

Your benefit is obvious: you may secure direct gross sales with American producers, probably at a premium to the market price.

How so?

Well, domestically mined copper doesn’t carry any tariff risk.

This means home miners can offer US producers a dependable provide of copper at a low cost to imported materials.

That probably provides them room to charge a premium to world market costs.

In different phrases, free money!

But for this to work, these home miners should maintain downstream refining infrastructure.

You see, many copper miners solely partially course of their ore on-site into what’s referred to as ‘copper concentrate’.

That’s typically despatched to China for processing, the place it’s refined into a high-purity metallic referred to as copper cathode.

That’s the uncooked materials used for making pipes, wiring, or any items made out of copper.

But copper is only one instance…

Given tariffs will possible hit ALL minerals, this chance isn’t only for copper miners.

Any US-based mining operation that may course of ore on-site and promote it on to producers might probably maintain an benefit.

Whether that’s mining iron ore and processing it into metal or digging up uncommon earths and processing it into the prized NdPr magnets.

The benefit comes from OWNING
all the provide chain.

AND stopping the product from ever-shifting exterior US borders.

That’s the one method these miners will side-step tariffs and faucet into a probably profitable home metals market.

One that might offer a substantial premium above world market costs.

So, how do you play that as an investor?

I totally admit that the US doesn’t have a wealthy offering of listed mining stocks for buyers, particularly these with downstream functionality.

However, my analysis has recognized a handful of potential winners from this distinctive alternative.

I issued a buy alert on one of these stocks earlier this month.

If you’re interested by studying more, you may be a part of me right here at Diggers & Drillers.

Enjoy!

Regards,

James Cooper,
Editor, Mining: Phase One and Diggers and Drillers

All advice is common advice and has not taken into consideration your personal circumstances.

Please search impartial financial advice concerning your own state of affairs, or if doubtful concerning the suitability of an investment.

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