Jon reflects on the outcome of the US presidential election and takes a look at how Donald Trump might impact the mining industry across the world.
There’s been a lot of conflicting headlines since the news broke that Americans had chosen their new president as Donald Trump. Indeed, with headlines like ‘Trump Slump: gold mining is tumbling’ to ‘Mining companies seen as winners’ it’s hard to actually work out what the future might hold.
During his campaign, Trump made it clear that he favoured the fossil fuels, with climate change taking the backseat. Of course it’s not as straight forward as ‘bringing back coal power’. Coal will find it difficult to compete with the renewable alternatives – which are more affordable as well. Even if the Trump administration does repeal EPA’s Clean Power Plan and the Paris Accord on climate change, many US states are still opposed to coal-fired power. And word is out that coal combustion is far deadlier to humans than other sources. So, coal miners may perhaps find their celebrations a little premature?
Coal aside, what were some of the immediate impacts on global mining?
As the news broke, the FTSE 350 mining index was up 3-4%. Among the biggest winner was Mexican precious metals producer Fresnillo PLC, rising 9%. Iron ore pricing saw a rise, albeit still a far cry from that of the 2013-2014 levels. Gold also experienced a short live high but a week later is back to normal (low) levels – in fact a six month low according to mining.com.
One rumour that is keeping the mining industry optimistic is that the Trump administration has its sights set on introducing a spending program of £500 billion. Donald Trump has not held back on his promise to lift federal regulations and end commitments to environmental rules that have slowed down both mining and oil and gas drilling.
As is typical with the Trump style, his aim is for the US economy to be the big winners here. However, with infrastructure promises as grand as his, and the undeniable (and likely irreversible) globalization of this industry, I would be surprised if this didn’t extend further than the US alone. Though perhaps not to those countries in the Organisation of the Petroleum Exporting Countries (OPEC) as his America First Energy Plan does specify that the U.S. should “become, and stay, totally independent of any need to import energy from the OPEC cartel or any nation hostile to our interests.”
No doubt during and after Trump’s transition, more will be revealed about general sentiment from the industry. I will be watching.