Some ASX miners are likely to benefit from the federal government’s $1.3 billion plan to process more critical minerals on our shores.
These ASX shares can thank the US-China trade war and COVID-19 for this new tailwind. These events have convinced Prime Minister Scott Morrison to develop a 10-year roadmap for critical minerals, reported the Australian Financial Review.
It’s become painfully apparent that Australia and the world have become too reliant on China for raw materials used in electronics and advanced manufacturing.
The Chinese government could restrict the supply of these minerals to gain the upper hand in any trade dispute. Another global pandemic could also bring key industries to their knees.
ASX mining shares that could get new government funds
The irony is that Australia has some of the world’s biggest deposits of these commodities. Our miners mostly dig them up and send them overseas to be processed into higher value products used in electric vehicles, advanced weapons, telecom equipment and green tech.
The Australian government wants to capture more of the value chain and acknowledges that it will need to invest alongside industry to achieve this.
This is good news for the likes of the Lynas Rare Earths Ltd (ASX: LYC) share price and Iluka Resources Limited (ASX: ILU) share price. The former mines rare earths while the latter mineral sands.
Australia joins others in funding critical minerals
There is a global trend for governments to contribute to such projects. The US and South Korean governments are only a few examples.
But rare earths and mineral sands are unlikely to be the only commodities that our government would like to support.
ASX lithium and nickel miners may also be able to tap into federal government grants as these are used extensively in batteries.
Such a move could support the IGO Ltd (ASX: IGO) share price, Galaxy Resources Limited (ASX: GXY) share price and Pilbara Minerals Ltd (ASX: PLS) share price.
10-year roadmap details
The AFR reports that our prime minister will reveal details of the 10-year roadmap tomorrow. The plan will help position Australia as not just a global resources powerhouse, but also a leader in manufacturing and value-added processing.
The initiative is seen as a way for the Morrison government to win over voters in coal mining regions of Australia, while pacifying city voters concerned about climate change.
Much of the $1.3 billion in funds could be used to develop processing facilities in the Hunter and Central Queensland.
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Motley Fool contributor Brendon Lau owns shares of Lynas Rare Earths Ltd and Iluka Resources Limited. Connect with me on Twitter @brenlau.
The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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