use tariffs as a ‘scalpel’, not as a ‘small’ By Reuters

Authors: Ernest Scheider and Shasvat Avasti

NEW YORK (Reuters) – U.S. President-elect Donald Trump should implement tariffs strategically rather than overtly as he aims to support U.S. mining companies facing stiff Chinese competition, a senior executive at cobalt producer Jervois said on Wednesday. Global.

Jervois, like many US producers of cobalt, lithium and other critical minerals, has struggled in recent years as Chinese rivals flood global markets with cheap supplies of the metal that are often produced to standards below what many governments and producers expect.

For Jervois, that competition caused him to close America’s only cobalt mine before it even opened. it is used to make batteries for electric vehicles, electronics and a range of weapons, among others.

Trump, who took office in January, has threatened to impose broad tariffs on Canada, Mexico and China, each tied to a basket of far-reaching policy proposals. Speculation has swirled in recent weeks that Trump could use the tariffs to boost US mining.

“We have to be careful with tariffs.” What we’re looking for is more of a scalpel approach than a sledgehammer,” said Matthew Langerich, head of the company’s US operations, in an interview at the Reuters NEXT conference in New York.

Lengerich noted that cobalt and other critical minerals are not typically imported as raw metal into the U.S., but are used overseas to make cell phones and other products that are then imported.

The US, for example, already imposes a 25% tariff on Chinese cobalt, which is somewhat ineffective because few Chinese miners bring the metal into the country.

“Demand for cobalt continues to grow and is actually growing at an incredible rate,” Lengerich said. “But the market is overstretched right now.”

EFFECT OF TAX CREDITS

But tying the Inflation Reduction Act’s electricity tax credits to where critical minerals are sourced is the kind of market product Washington should be encouraging, Lengerich said.

“We’ve actually seen a change in purchasing behavior and customers willing to pay up to a 25% premium for cobalt sulfate that ends up in an electric vehicle,” Lengerich said.

“These are policy things that we need to learn from and say, ‘Well, how else can we encourage manufacturers to use domestic supply (of metals) in their products’.”

Trump’s transition team aims to end that tax credit for electric vehicles, Reuters reported last month.

Washington should consider establishing a national metal stockpiling program when commodity prices are low to financially help American mining companies and ensure supplies for defense needs, Lengerich said.

For Australia’s Jervois, however, its US cobalt mine is likely to remain closed until metal prices reach at least $20 a pound, roughly double current levels, Lengerich said. This is mainly due to the cost of meeting high US safety, labor and environmental standards.

“We certainly need to see much higher prices than what we have today,” Lengerich said. “It’s not a level playing field, and I think that’s one of the things that makes it really challenging.”

The company received funding from the Pentagon last year to study how best to develop a US cobalt refinery, something the country also lacks.

Despite Trump’s widely known support of oil and gas production, Lengerich said he expects the incoming president to support more domestic mining, largely due to national security concerns.

“We would expect to see continued support for building those supply chains,” Lengerich said. “These things don’t happen overnight. These are challenging projects that take time to accomplish.”

To watch live coverage of the World Stage, go to the Reuters NEXT news page: