Headlines about a Chinese economic slowdown may get good web traffic, but the real story is that China is buying up uranium and other resources around the world, says Gold Stock Trades writer Jeb Handwerger. Meanwhile, tensions in Russia highlight the massive country's resource dominance in natural gas, oil, uranium, platinum group metals, rare earths and nickel. Handwerger tells The Mining Reportthat North America is already acting to develop resources that can meet both domestic and international demand—and this global geopolitical uncertainty is an investment opportunity.
The Mining Report: Jeb, how will the companies you follow be affected by the crisis in the Ukraine and the growing tensions in East Asia over China's claims on islands held by Japan and the Philippines?
Jeb Handwerger: This is really all about natural resources and the ability to control the trade. There's a whole list of 10 to 15 strategic minerals that come from China almost exclusively. Russia, on the other hand, has a major control on palladium, platinum group metals and nickel, as well some of the agricultural fertilizers, such as potash. Russia also has a critical supply of uranium; it produces about 3,000 tons of uranium, close to double United States production of uranium. Not only that, but Russia has strategic ties with Kazakhstan, which produces close to 20,000 tons of uranium—over 36% of global supply.
I've written for years that these metals and these materials are at risk of critical supply shortfall. It's even more the case now as these tensions increase. There is greater risk of China or Russia turning off the natural gas pipelines or cutting exports of the rare earths and graphite.
Their control of these critical metals is going to force the West, the European Union and the U.S. to develop their own strategic, secure supplies of these materials needed for the critical technologies.
We're already beginning to see that take place. Many junior miners have made strategic advancements with some jurisdictions in the rare earth sector. For instance, the state of Alaska made a proposal to help fund a rare earth mine in Alaska controlled by Ucore Rare Metals Inc. (UCU:TSX.V; UURAF:OTCQX). In Canada, there's a push in the Parliament to look for secure supplies, an effort which may benefit Pele Mountain Resources Inc. (GEM:TSX.V). In Europe, I like Tasman Metals Ltd. (TSM:TSX.V; TAS:NYSE.MKT; TASXF:OTCPK; T61:FSE) as the company could be a strategic supplier of technology metals to the EU, which may be very concerned about supply as tensions increase with Russia over Crimea. If investors are not yet positioned, they should position themselves either through the strategic metal ETFs or even better, the specific REE junior miners that are positioned for upside breakouts.
Next page: War and tension