In a recent address to a joint session of Congress, former President Donald Trump made a bold promise to boost mining activities in the United States. This move, aimed at increasing the production of critical minerals and rare earths, is expected to necessitate substantial subsidies to persuade international investors, particularly Japanese trading houses, to engage in high-risk mining projects.
"Historic action to dramatically expand the production of critical minerals and rare earths here in the U.S.A." – Donald Trump
Central to this development is MP Materials, a rare earth mining company with an open-pit mine located in Mountain Pass, California. The company's operations are poised to play a crucial role in achieving Trump's mining goals. However, persuading Japanese trading houses to invest requires overcoming significant hurdles.
Sumitomo, one of Japan's prominent trading houses, has recently announced a strategic plan to reduce its reliance on Chinese smelters. This decision aligns with Trump's call for increased domestic mining. The strategy involves refining ores mined by MP Materials in Japan's own smelters rather than depending on Chinese facilities. This shift is pivotal in supporting the former president's vision for American mining independence.
The reduction in the use of Chinese smelters comes as part of a broader effort to comply with the U.S. call for increased mining output. The challenge lies in attracting investment from Japanese trading firms like Sumitomo, which may be wary of the high-risk nature of such ventures. To address this, subsidies are expected to play a vital role in making these projects more appealing.
These subsidies are seen as crucial incentives to encourage Japanese trading houses to venture into these ambitious projects. The financial support aims to mitigate the risks associated with investing in mining operations that are critical to bolstering the domestic production of essential minerals.