By Mark A. Smith, P.E., Esq.
CEO and Executive Chairman
NioCorp Developments Ltd.
On behalf of the entire NioCorp team, let me convey our best wishes to you and your family in this time of global challenge. Please stay safe, stay vigilant, stay healthy, and follow the guidelines and recommendations of health authorities in your area.
Here at NioCorp, our employees are currently healthy and actively engaged in our ongoing and intense effort to secure project financing necessary to move the Elk Creek Superalloy Materials Project to construction and commercial reality. Safety has long been a core value to the NioCorp team, and we are taking all necessary precautions to assist in the national effort to inhibit the spread of the COVID-19 virus.
In my opinion, this pandemic will pass, as all do, and the world will be stronger, smarter, and more resilient as a result.
As we all engage in the day-to-day battle with this virus and its impacts, it also is important to think ahead about its potential long-term geopolitical and macroeconomic impacts.
There is little question in my mind that the global economy and investment markets will come roaring back to life once this pandemic wanes — the only question is when. A great deal of capital around the globe is available and is continuously looking for attractive investment opportunities, particularly those that offer stable returns over longer-term horizons.
In that regard, I believe one global macro trend is highly likely to emerge and accelerate in the aftermath of COVID-19: increased investment in domestic materials supply chains as a means of reducing the reliance of Western nations on supply chains in developing nations.
It is axiomatic that, in times of emergency, a nation’s economic and national security is dependent upon its ability to produce critical products from domestic supply chains and from raw materials it can mine and process within its own borders. Asia’s dominance in many strategic supply chains has become painfully obvious since the COVID-19 pandemic erupted.
A recent Dun and Bradstreet analysis underscores this point. It found that more than 50,000 companies, including 163 in the Fortune 1000, rely on one or more direct or Tier 1 suppliers in the regions of China that were most impacted by the COVID-19 virus. Five million companies – including nearly all of the Fortune 1000 – have at least one Tier 2 supplier in those regions.
Guess which country has the most Tier 1 suppliers in the impacted regions? See the chart below.
Distribution by Country: Companies with Tier 1 Suppliers in Impacted Regions
This is not to be critical of China or other countries in Asia. They encouraged the growth of these supply chains as a logical economic strategy to bolster their economy and create jobs for their citizens. Likewise, companies in the West that sought access to these supply chains did so in pursuit of their own economic interests.
But I believe that critical minerals supply chains are different. Access to critical minerals, and geopolitical factors associated with their geolocation, raises issues that extend beyond the pursuit of economic interest. Critical minerals supply chains are fundamental to a country’s national security. Encouraging the development of domestic critical minerals supply chains is therefore a national security issue for any nation.
U.S. DEPENDENCE ON FOREIGN SOURCES ON CRITICAL MINERALS
What is the current status of foreign minerals dependence for the U.S.? It’s a very sobering picture, as illustrated in the U.S. Geological Survey chart below.
I added three red arrows to the USGS chart to illustrate the critical metals that we plan to produce at NioCorp’s Elk Creek Superalloy Materials Project in southeast Nebraska once we are able to secure project financing necessary to move the Project to construction and operation.
Recognition of this dangerous dependence on foreign sources of critical minerals is growing. A recent survey by the National Mining Association found that “more than 90 percent of executives are concerned about supply disruptions outside of their control, citing geopolitics and increasing global demand as the most pressing factors.” The NMA study also found that most executives surveyed “also believe minerals and metals demand will only increase in the next five to 10 years.”
In my view, COVID-19 is going to shine a much more intense spotlight on supply chain vulnerabilities in the U.S. and other Western nations. That’s why it was no surprise to me that President Trump this week activated the statutory tools contained in the U.S. Defense Production Act, which will provide the U.S. Government with added flexibility to take rapid action to shore up and encourage greater investment in U.S.-based supply chains.
Institutional investors and large investment funds are already looking more carefully at opportunities that will be presented by this coming shift to domestic supply chains – particularly those supply chains that involve the production of critical minerals needed by both civilian and defense applications. In my mind, that bodes particularly well for long-term and sustained investment in critical minerals projects in the U.S., such as the Elk Creek Project.
Once again, stay safe, stay vigilant, stay healthy, and follow the guidelines and recommendations of health authorities in your area.
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Cautionary Note Regarding Forward-Looking Statements
Certain statements contained in this blog article may constitute forward-looking statements, including statements regarding the Company’s expectation of certain macroeconomic and geopolitical impacts of the Coronavirus pandemic, actions that may be taken by governments and investors in response to the pandemic, and the Company’s ability to secure project financing necessary to move the Project to construction and operation. Readers are cautioned that such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause a change in such assumptions and the actual outcomes and estimates to be materially different from those estimated or anticipated future results, achievements or position expressed or implied by those forward-looking statements. Risks, uncertainties and other factors that could cause NioCorp’s plans or prospects to change include risks related to the Company’s ability to operate as a going concern; risks related to the Company’s requirement of significant additional capital; changes in demand for and price of commodities (such as fuel and electricity) and currencies; changes in economic valuations of the Project, such as Net Present Value calculations, changes or disruptions in the securities markets; legislative, political or economic developments; the need to obtain permits and comply with laws and regulations and other regulatory requirements; the possibility that actual results of work may differ from projections/expectations or may not realize the perceived potential of NioCorp’s projects; risks of accidents, equipment breakdowns and labor disputes or other unanticipated difficulties or interruptions; the possibility of cost overruns or unanticipated expenses in development programs; operating or technical difficulties in connection with exploration, mining or development activities; the speculative nature of mineral exploration and development, including the risks of diminishing quantities of grades of reserves and resources; and the risks involved in the exploration, development and mining business and the risks set forth in the Company’s filings with Canadian securities regulators at www.sedar.com and the SEC at www.sec.gov. NioCorp disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.