US President Joe Biden’s executive order on the
strengthening of American manufacturing, which he signed during
his first week in office, is expected to have a direct effect
on demand for US-produced raw materials and finished products,
but also lead to wider support for developing projects that
feed strategic industries, such as transport, energy, defense
"American manufacturing […] must be part of the
engine of American prosperity now," Biden said.
"We’ll buy American products and support American
Biden signaled a previous lax approach to government
procurement that turned a blind eye to large volumes of imports
for materials sourced elsewhere, instead of relying on domestic
supply, is due to change. That specifically singled out iron
and steel, but entire sectors such as engines, auto parts and
vehicles are set to be put under the microscope.
"Under the previous administration, the federal government
contracts awarded directly to foreign companies went up 30%.
That is going to change on our watch," he said. The
administration will look to tighten the rules on company
waivers for foreign procurement, and combine that with more
transparency on the products that are sourced abroad, to
support domestic manufacturers’ ability to step
into those supply chains.
Biden also stressed investment opportunities in sectors
including "battery technology, artificial intelligence,
biotechnology, clean energy."
The executive order is expected to have two main impacts
– a bullish effect for domestic demand in established
industries, and a broader support for incoming and developing
projects and sectors.
In minerals, this approach could mean important developments
for rare earths, graphite and lithium, among others. Global
rare earths supply is dominated by China, which accounts for
some 90% of total output. The US has a domestic miner of rare
earths in MP Materials. It currently ships its rare earths
output to China to be refined, but the company previously
stated that it had received funding to build processing
facilities in the US; while that project was put on hold, it
could see a reprise under the new administration.
Additionally, Malaysia-based rare earths producer Lynas
announced its intention to set up a processing facility in
Texas – a project that will be part-financed with US
Department of Defense funding. Rare earths elements are
employed in defense systems and electric engines, as well as
wind turbines – all core sectors highlighted in the
Graphite is another mineral where meaningful developments
can be expected. At present, the US imports from sources
including China, Latin America, Canada and Europe.
As such, junior miners looking to set up local operations
could be particularly coveted. It is the case of the former
Alabama Graphite, a Canadian-owned developer that was taken
over by US mining explorer Westwater Resources in 2018.
Graphite mined at Westwater’s in-development Coosa
graphite project will feed a western supply chain of spherical
graphite for battery applications, the company stated. The firm
is setting up a pilot project to produce anode-ready spherical
graphite in Chicago and New York, together with a pilot
facility in Germany.
Separately, east Africa-based graphite producer Syrah
Resources is on track to expand its spherical graphite facility
in Vidalia, Louisiana, where graphite anode material is
produced from natural graphite that Syrah mines in Mozambique.
At present, China still accounts for almost all graphite
processing capacity for battery anodes. In January, Syrah said
it is on track to expand Louisiana production to 10,000 tonnes
per year, with a final investment decision expected in the
second half of 2021.
A similar case can be made for lithium developments. The
mineral, employed in batteries for electric vehicles (EVs) and
energy storage systems (ESSs) is mainly mined outside of the
US, and the bulk of processing capacity for lithium chemical
compounds is in China. In this sense, the US administration is
likely to look favorably at both incoming projects from
developers as well as established US companies with interests
in lithium operations abroad.
The first group includes Lithium Americas, which is
developing its 100% owned Thacker Pass project in Nevada and
has a stake in the Cauchari-Olaroz lithium project in northern
Argentina, in partnership with China’s Gangfeng
Lithium. The Argentina project will have an average expected
production of 40,000 tpy of lithium carbonate equivalent and
production is slated to start in 2022. The firm completed its
federal permitting process for the Nevada project earlier this
Incumbent US-headquartered lithium producer Albemarle runs
extraction sites in Chile’s Atacama region and is
developing the Silver Peak operation in Nevada, where it aims
to double carbonate production capacity by 2025.
The US steel industry has already applauded
Biden’s approach. "We are pleased by the
president’s action today," Steel Manufacturers
Association (SMA) president Philip K Bell said in a statement.
"Executive orders, rulemaking and Congressional legislation
should continue to focus on enhancing 'Buy America' in ways
that benefit American workers and companies."
The executive order will require government agencies to close
loopholes in the way domestic content is measured and boost
domestic content requirements. It also will increase the
price preference for domestic goods – the price
difference that the government can pay over that for material
from a non-US producer.
"We are pleased that [Monday's] executive order will tighten
up the process for considering waivers to existing domestic
preference requirements and will also increase domestic content
requirements for defining what constitutes a product that is
made in the United States," Kevin Dempsey, president and chief
executive officer of the American Iron and Steel Institute,
said in a statement.
The order will create a new position in the Executive Office
of Management and Budget that will be responsible for
implementing Biden’s push on federal procurement.
Agencies will be required to report on their implementation of
"Buy America" laws and make recommendations for achieving these
goals, and to continue to do so twice a year.
The executive order reiterates Biden’s support
for the Jones Act, which regulates maritime commerce and
requires cargo between US ports to be carried only by vessels
built, owned and operated by American citizens or permanent
"The order’s strengthening domestic content
requirements and calling for stricter enforcement of existing
legislation – like the Jones Act – is an
important step toward revitalizing our manufacturing base, as
well as protecting and creating jobs," USW International
president Tom Conway said in a statement.
The steel industry also cheered when former President Donald
Trump signed a "Buy American, Hire American" executive order on
April 18, 2017. Trump’s order was supposed to
crack down on the use of waivers and exceptions for "Buy
America" laws by requiring federally funded infrastructure
projects to use steel "melted and poured" in the United
The steel industry projects that the executive order signals
the Biden administration’s upcoming infrastructure
bill will benefit domestic producers and workers. "Our nation
is long overdue for serious, robust investment in our crumbling
infrastructure," Conway said. "[Monday’s] action
is crucial not only for rebuilding our nation’s
broken economy and making our country safer, but for laying a
foundation so that all of the work that stems from this
investment supports American jobs."
This could signal that the Biden administration will
continue the protectionist measures that helped bolster
domestic steel prices during the Trump era. The previous
administration implemented Section 232 tariffs in 2018,
imposing duties on imports on steel and aluminium of 25% and
Fastmarkets’ daily steel hot-rolled coil index,
fob mill US was calculated at $57.81 per hundredweight
($1,156.20 per short ton) on Tuesday February 2, up by 2.2%
from $56.56 per cwt on the previous day and by 3.1% from $56.06
per cwt on January 26. This marked the second-highest level on
record since Fastmarkets began collecting HRC data in 1960,
with the all-time high of $58 per cwt recorded on January