Government’s strategic roadmap to give these ASX miners a boost

Government's strategic roadmap to give these ASX miners a boost

Some ASX miners are likely to benefit from the federal government's $1.3 billion plan to process more critical minerals on our shores.

Brendon Lau ❯

@brenlau

Brendon’s passion for shares started by accident in 2003 and he has worked in various roles around capital markets ever since as a trader, stock analyst and markets reporter with the Australian Financial Review. Most of his wealth has come from share investing than any other asset class, and that has given him the financial freedom not to work full-time, if he chooses to. Brendon is a medium to long-term investor who aims to hold positions for a year or longer and is focused on fundamental analysis, although he will occasionally use technical indicators to time his entries and exits. Brendon has an MBA from Melbourne Business School and is RG 146 certified. He lives in Melbourne with his wife, three kids and two dogs.

Published March 4, 2021 10:37 am AEDT

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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