In a deep dive analysis of the U.S. Metals and Mining sector, Morgan Stanley analysts highlighted the need for the United States to address its reliance on imports for critical minerals by reshoring and securing its mineral supply chain.
This call to action is driven by decades of declining investment in mining and the recognition that the U.S. is heavily dependent on foreign sources for essential minerals.
“Expect further policy support in this area, even though the supply chain for critical minerals cannot be entirely reshored to the U.S.,” the analysts wrote in a report.
Securing the mineral supply chain is crucial for various industries, including technology, manufacturing, and defense, as these minerals are essential components in various products and technologies.
Ensuring a stable and domestic supply of critical minerals is seen as a strategic move to reduce vulnerabilities associated with relying on foreign sources.
“Given the majority of permitting reform is geared toward promoting the development of mining projects, the most likely beneficiary, in our view, of policy reform and new investment into the U.S. mineral industry will be the Junior Mining and Exploration industry.”
“Cutting red tape and streamlining the domestic mine permitting process will potentially allow these companies to develop and ramp new mining projects faster than in recent decades.”
Along these lines, the analysts highlighted the following 3 stocks that could benefit from the potential “mining boom”:
- Freeport-McMoRan (NYSE:FCX), which has two potential U.S. growth projects: Baghdad expansion and Lone Star sulfide expansion, both in Arizona;
- Teck Resources (NYSE:TECK), which has a development project NorthMet, located in North Minnesota; and
- MP Materials Corp (NYSE:MP), which is the largest U.S.-based miner of rare earths and a play on accelerating adoption of electric vehicles and electrification trends in wind turbines.