2019-12-16 14:07:311970-01-01 00:00:00

Trade War Develops

Australia is poised to become the beneficiary of a massive rare earths and other key minerals demand with the United States looking to replace China as its minerals provider. China currently supplies the US with highly important minerals but is considering placing a new sanction which would see all critical mineral exports to the US banned as the trade war escalates.

To recap, the trade war kicked off last year when the US implemented its first China-specific tariff. US President Donald Trump had tweeted ‘China is neither an ally or a friend they want to beat us and own our country’. The two powerhouse nations have been exchanging blows ever since.

A string of US tariffs have been imposed on China’s consumer products, chemical and construction materials, textiles, food and agricultural products, electronics and automotive parts. This was met with China placing tariffs on US goods including agricultural, food, textiles, chemicals, materials and machinery. Tariffs on both sides have continued to increase in a tit-for-tat fashion and China has additionally filed two complaints against the US at the World Trade Organisation. Numerous trade talks in Beijing and Washington this year between the nations have failed to procure a resolution. Relations continued to break down on 1 April 2019 when China banned all types of fentanyl (an opioid treatment) exports to the US. The US retaliated last month by announcing that Chinese technology company Huawei had been placed on its ‘entity list’, banning it from doing business with US companies. The total US tariffs applied exclusively to Chinese goods stands at US$250 billion while the total Chinese tariffs applied to US goods is lower at US$110 billion.

It is now expected that in response, China will ban critical mineral exports to the US, including rare earths, lithium, cobalt and copper. This is a big blow to the US given China dominates the rare earth market and the US gets around 80% of its critical minerals from China.

Consequently, the US is looking to Australia to replace China as its supplier of the essential minerals, in order to mitigate for the potential ban and also to reduce China’s dominance in the rare earths industry. The crucial minerals are utilised in a range of industries including the manufacturing of US military weapons and guidance systems, batteries and many other motorised products.

Washington is currently working with Canberra to come to an arrangement, and the Australian Department of Defence has since been endorsed by US Defence chiefs in support of a US-Australia trade deal.

Australia is one of the only countries which has rich supplies of rare earth and the other essential minerals required by the US, with a number of ASX listed companies having very large, and world class deposits. Australia has approximately one third of the world’s total minerals.

Australian companies within the materials sector are expected to benefit from the news. One being Arafura (ARU), the mining exploration company focusing on rare earths. It’s share price skyrocketed 35% this morning.

In addition, the rare earth exploration company Alkane Resources Ltd (ALK) is expected to benefit. It is engaged in rare earth mineral projects in the central west of NSW in Australia. The Group’s most significant development is the Dubbo Project. Its shares are up 3.75% this morning.

Other Australian companies dealing with lithium copper and cobalt will potentially benefit such as Mineral Resources (MIN), the Australia based lithium miner operating out of Western Australia, along with Oz Minerals (OZL), the Australian based copper miner with its Prominent Hill Project, Carrapateena Project, West Musgrave Project in Australia and various other projects in Brazil.

With the US wanting to decrease China’s market share in the mineral market, in conjunction with the highly anticipated ban on exporting crucial minerals to the US from China, Australia is positioned well to inherit significant gains in market share by procuring the United States’ minerals.

By Isaac Batterham

Click here for a 7 days access to our Lotus Blue Portal.

KOSEC does not take into account the investment objectives, financial situation and advisory needs of any particular person, nor does the information provided constitute investment advice. Under no circumstances should investments be based solely on the information provided. KOSEC is intended to provide general information only. Please be aware that investing involves the risk of capital loss. This message is confidential and may be privileged. It is intended only for the use of the addressee named above. If you are not the intended recipient, any unauthorised dissemination, distribution or copying is illegal. We do not guarantee the security or completeness of information hereby transmitted and are not liable in either respect or in respect of any delay. Nothing in this message is intended as an offer or solicitation for the purchase or sale of any financial instrument. Any market prices or data, unless specifically verified and identified as such, are not warranted as to completeness or accuracy. Kodari Securities Pty Ltd (KOSEC) is a Corporate Authorised Representative (No. 399 556) of Longhou Capital Markets (AFSL No. 292464) which is regulated by the Australian Securities and Investment Commission (ASIC). KOSEC wishes to disclose that KOSEC and its staff may hold stock they recommend in their own portfolios and that any decision to purchase recommended stock should be done so after the purchaser has made their own inquires as to the suitability to their own requirements. Click here to view our FSG.

KOSEC Terms & Conditions

Kodari Securities Pty Ltd (CAR 399556) trading as KOSEC is regulated by the Australian Securities and Investment Commission (ASIC). KOSEC is a financial services company and any information provided by its platforms, portals, reports and documents is protected by copyright. Any unauthorised production of this information is prohibited.
KOSEC reserves the right to change or remove any information provided on our website, reports or any documents including these terms and conditions at any time without notice. The change or modification to the terms and conditions will be effective immediately upon posting an updated version on our website, necessary platforms and documents. It is recommended that you review the information provided on our website, including these terms and conditions frequently for any changes.

Disclaimer
KOSEC provides general advice only. The information provided is of a general nature only and does not take into account your individual objectives, financial situation or needs. It should not be used, relied upon, or treated as a substitute for specific professional advice. KOSEC recommends that you obtain your own independent professional advice before making any decision in relation to your particular requirements or circumstances. Please make sure you read our Financial Services Guide (FSG).

KOSEC does not guarantee any returns. Past performance of any product discussed is not indicative of future performance. (We urge that caution should be exercised in assessing past performance. All financial products are subject to market forces and unpredictable events that may adversely affect their future performance). Investing in the stock market can incur huge losses. Please also be aware that fees will incur on every transaction regardless of the performance of your investments or returns generated. Employees and or associates of KOSEC may hold one or more of the stocks, securities or investments reviewed by the company.

Your use of information from our website, reports, documents and from talking to our representatives/associates is at your risk. Under no circumstance should the investment be based solely on KOSEC information and general advice. You should seek professional financial planning advice.
KOSEC aims to maintain the accuracy of the data and information provided on this website, by using information prepared from a wide variety of sources, which KOSEC to the best of its knowledge and belief, considers accurate and does not make any representations or warranties of any kind, expressed or implied, about the completeness, accuracy, reliability, suitability or availability of the information provided.

We may at times refer to third parties, which the details of these third parties have been provided solely for you to obtain further information about other relevant products and entities in the market. KOSEC has no control over the information third parties have, or the products or services offered, and therefore make no representations regarding the accuracy or suitability of such information, products or services. You are advised to make your own enquiries in relation to third parties. Our inclusion of any third party content is not an endorsement of that content or the third party.

Fees
As a client you will be charged a yearly service fee and a set brokerage fee per transaction. Your service fee will automatically renew at the end of your agreed 12 month period at the same rate advertised at the time. Your credit card or bank account will be charged for a further year following which will again auto renew until you cancel your yearly service fee. You can cancel the auto renewal at any time in advance of the renewal date by contacting us. KOSEC is aware of the need to ensure the security of your credit card details and our payment systems are compliant with the Payment Card Industry (PCI) Data Security Standard.

Privacy
You consent to receiving email correspondence from KOSEC, as well as companies KOSEC has an association with. These emails will be sent by KOSEC and third party companies. You can opt out of receiving any category of emails at any time by contacting us. We may from time to time inform you of special offers, or even ask your opinion of the services we provide, but your involvement is optional. Should you request us to do so, we will archive your details.

Indemnity and Liability
You indemnify KOSEC from all claims or threatened claims, suits, demands, damages, costs as well as including legal costs incurred in dealing with any threatened claim, expenses made by any person or corporation against KOSEC and any other amounts which is caused by KOSEC providing information, execution and General Advice.

You hold KOSEC harmless and release it from any liability in respect of any loss, harm or damage arising from a decision made by you on the basis of information obtained through the use of our portal, reports, documents or any General Advice given and any transaction taken place.

You hold KOSEC harmless and release it from any liability in respect of any loss, harm or damage arising from delays in executing orders for the client and acknowledges KOSEC makes no guarantees about the time taken to execute an order on behalf of the client. You acknowledge that KOSEC relies on third parties in providing technology and release KOSEC from any harm, loss or damage you may suffer as a result of the failure of such information technology.

Cookies and Links
KOSEC website, and its portal uses cookies, which lets us identify your browser while you are using the site or our portal. Cookies do not identify you personally. They simply allow us to track your usage patterns. If you prefer not to receive cookies, you can configure your browser to reject them or to notify you when they are being used. The functionality of the KOSEC website may be impacted if you restrict the use of cookies.

Fill up the form below and we will get back to you as soon as possible.

CLAIM YOUR FREE E-BOOK &
7 DAY ACCESS TO LOTUS BLUE

STOCK MARKET SUCCESS

KOSEC’s CEO, Michael Kodari’s new book, “Stock Market Success” valued at $39.95, available at Dymocks book stores with all the proceeds going to Dymocks Children’s Charities.

CLAIM YOUR FREE E-BOOK WHEN YOU LOGIN TO LOTUS BLUE INVESTMENT PORTAL

Latest TV Commercial