Reshoring minerals is a processing problem, not a mining one: lawyer

Western governments risk falling short in their push to reshore critical-mineral supply chains because the bigger constraint is no longer finding ore, but processing it into materials manufacturers can actually use, mining lawyer Rebecca Seidl-Englesby says.Seidl-Englesby, who leads the critical minerals and metals practice at international law firm Baker Botts, says the mismatch starts with timing. An average copper mine takes about 17 years from discovery to first production, while permitting can stretch development to nearly 30 years in the US. Meanwhile, industrial demand moves far faster.“When someone says reroute the supply chain, the raw material into that sentence is measured in decades, but the demand itself is measured in quarters,” Seidl-Englesby said on The Northern Miner Podcast.China refines roughly half the world’s copper and about 90% of its rare earths, she said, meaning ore mined in the US can still travel to Chinese facilities before becoming usable material. Building Western separation and refining capacity is expensive, slow and environmentally challenging. Even after a plant starts operating, manufacturers may need 18 months to two years to qualify its output before buying it.That lag helps explain why Western governments can finance new mines without fundamentally rerouting mineral supply chains. Unless processing capacity and qualified customers develop alongside extraction, new production can remain dependent on the same downstream infrastructure governments are trying to replace.Seidl-Englesby brings experience from both sides of mining transactions. Before joining Baker Botts in 2024, she worked at BHP (NYSE, LON, ASX: BHP), first overseeing US shale assets and later working from Santiago on copper exploration, joint ventures and projects across South America. She now represents companies, manufacturers and investors navigating increasingly complicated critical-minerals deals.Governments become buyersThe most consequential change over the past two years has been Western governments shifting from grantmakers toward commercial counterparties, Seidl-Englesby said.Governments are taking equity positions, guaranteeing offtake, establishing price floors and building stockpiles. She sees that as an important evolution because the constraint facing many strategic projects is not simply construction capital but revenue certainty.The US has expanded those tools through the departments of energy, war and commerce, including federal credit programs and the energy department’s Office of Strategic Capital.MP Materials lands multi-billion Pentagon dealSeidl-Englesby pointed to MP Materials (NYSE: MP) as a model. The Pentagon combined a price floor and 10-year offtake agreement with a loan and equity investment, becoming the company’s largest shareholder. She expects elements of that structure to appear in other strategic-minerals deals.Such intervention carries conditions. Government investments can include clawback provisions, domestic-content requirements, transfer restrictions and golden-share consent rights, all of which can influence future transactions.Companies increasingly diligence government equity much as they would debt because of those obligations, Seidl-Englesby said.Still, criticism that governments are picking winners assumes there is a functioning market to distort. In her view, critical-minerals pricing instead operates within an opaque system heavily influenced by a dominant state actor capable of using supply as leverage.Price floors and offtake commitments can therefore create the revenue signals private investors need rather than simply substitute government capital for private money.Seidl-Englesby was more cautious about stockpiling as a standalone solution, pointing to the US government’s Project Vault effort.“There has to be a stockpile to stockpile,” she said.Trump launches $12B ‘Project Vault’ to cut China relianceThe problem is straightforward: strategic inventories cannot solve shortages when sufficient processed material is not available to purchase in the first place.What gets fundedThe projects most likely to attract strategic capital increasingly distinguish themselves through commercial readiness rather than geology alone, Seidl-Englesby said.Investors and governments want a creditworthy offtaker with credible pricing mechanisms, permitting that is substantially complete, a clear plan for processing and qualification, and a capital structure capable of surviving foreign-investment scrutiny. A large legacy shareholder, for example, can potentially disqualify an otherwise attractive project from federal funding.A mineral deposit by itself is therefore no longer enough. The investable asset is a credible route connecting that deposit to a refinery, a customer and ultimately an end product.Seidl-Englesby paraphrased the argument made by Gracelin Baskaran of the Center for Strategic and International Studies: a mine without a refinery and a customer risks becoming a stranded asset.That commercial integration is becoming more important as manufacturers move upstream. Automakers including Stellantis, Volkswagen, General Motors and Ford are taking equity and offtake positions in mineral assets — arrangements that would have been far less common a decade ago.For explorers seeking strategic partners, Seidl-Englesby’s advice is to prepare before approaching them: establish clear title and disclosures, preserve unencumbered offtake, clean up the capital structure and identify precisely which part of the supply chain the project can fill.“The contest is increasingly won or lost long before a mine reaches production,” Seidl-Englesby said. “If you can articulate your place in an integrated system, that’s financeable. You’re better positioned than selling a one-off of great geology in isolation.”The emerging model suggests Western mineral security will depend less on how many deposits governments can help finance than on whether they can build an integrated commercial chain around them. Mines provide the raw material, but refining capacity, qualified customers and reliable demand determine whether that material actually escapes China-centred supply chains.Weiter zum vollständigen Artikel bei Mining.com Weiter zum vollständigen Artikel bei Mining.com