Palm Beach, FL – June 1, 2022 – FinancialNewsMedia.com News Commentary – Politicians and policymakers are keen to decouple the United States from relying too heavily on China. Making America great again was a big part of Trump’s reign, and President Biden is also keen to strengthen domestic manufacturing. This article highlights some of the ways companies could reduce their reliance on China, referencing General Electric Company (NYSE: GE), DOLE (NYSE: DOLE), Intel (NASDAQ: INTC), and Defense Metals Corp. (TSXV: DEFN) (OTCQB: DFMTF) (FSE: 35D).

Reducing reliance on China is vital to national security because an economically strengthened China remains a threat to the US economy. The ongoing war in Ukraine further hammers home this point, highlighting the need to revitalize domestic production and bolster the US economy.

Many people believe this should begin with consumer goods, electronics, processed foods, and natural resources.

China is currently the United States’ largest goods trading partner with $559.2bn in total (two-way) goods traded during 2020. Of this, imports totaled $434.7bn. The main import categories were electrical machinery ($111bn), machinery ($97bn), toys and sports equipment ($26bn), and furniture and bedding ($23bn).

Bringing manufacturing back to the United States increases domestic jobs and improves national security.

One area that could benefit is processed fruit and vegetables. In 2020, China was the seventh-largest supplier of agricultural imports to the US, including $896m in processed fruit and veg.

Total Produce USA Holdings, Inc. is an American subsidiary of DOLE (NYSE: DOLE). Last year Total Produce and Dole Food Co joined forces to become the premier global leader in fresh produce. In 2020, Total Produce had 38 facilities in North America and 93 in Central and South America. This gives Dole a US presence which may help reduce the country’s reliance on Asian imports.

For over 60 years, General Electric Company (NYSE: GE) and Hitachi have been designing and building the world’s safest boiling water reactors. Today, GE Hitachi offers a small modular reactor designed to be cost-competitive. In December, the province of Ontario, Canada, selected GE Hitachi Nuclear Energy to build a grid-scale small modular reactor and bring it online by the end of the decade.

While the COVID-19 pandemic highlighted the risk to global supply chains, geopolitical uncertainty also brings the threat of sanctions.

AT THE MERCY OF THE EAST

It’s no secret that the semiconductor shortage has upended industrial production and caused disruption across several sectors.

The US/China trade war has been simmering since 2018 and computer chips remain a bone of contention. The US is heavily reliant on the east for its semiconductors, with Taiwan being the primary source. Tensions between China and Taiwan ensure this remains a sensitive topic.

To combat this, Intel (NASDAQ: INTC) is building a semiconductor fabrication plant in the US at a cost of up to $120bn.

Like semiconductors, rare earths are a core component in many electrical devices taken for granted in the west. Yet, in 2019, China threatened to stop exporting rare earths to the US.

Once again, such a ban highlights the fragility of a global supply network and the national security threat Asian reliance brings. Since this threat to the rare earth supply chain, there have been increasing calls to build rare earth processing facilities in North America.

PROCESSING RARE EARTHS IN THE US

Defense Metals Corp. (TSXV: DEFN) (OTCQB: DFMTF) (FSE: 35D) is a rare earths exploration and development company. It owns 100% of the Wicheeda Rare Earth Element Property in Canada.

The Wicheeda deposit could represent approximately 10% of the world’s current production of vital rare earths, and Defense Metals plans to get that to production within the near term.

Rare earths are commonly used in the electric power market, defense industry, and in the production of green energy technologies. These include rare earth magnets used in wind turbines and permanent magnet motors for electric vehicles.

As there is currently no refining capacity available in North America, future producers would have no choice but to send their rare earths to China for processing. If a regional separation facility is not built, Defense Metals will also be forced to sell its concentrate to China, or build its own facility.

According to the company’s Preliminary Economic Assessment (PEA), the sale of a mineral concentrate will be profitable for the first four years and will enable Defense Metals to fund its own hydrometallurgy facility thereafter.

Therefore, the company is keen to raise awareness of this issue and will be attending a convention in Washington and meeting with Canadian politicians to look for government funding and support. The US and Canadian politicians have been vowing to release funds for this sort of project and Canada just budgeted $3.8bn to this end.

Building processing and refining facilities in North America will require billions of dollars. But it will provide an economic boost to the region and improve national security, which is currently a top priority for all western countries.

A CONSERVATIVE APPROACH

Defense Metals’ Wicheeda is amenable to the production of rare earths floatation concentrate, like producing mines, Mountain Pass, owned by MP Materials Corp (MP) and Mount Weld, owned by Lynas Rare Earths Ltd (LYC).

Competing companies face higher infrastructure CAPEX for their projects before they even begin building production facilities. In contrast, Defense Metals is conservatively managing CAPEX while plans for refining facilities are not out of the question.

When SRK carried out the PEA on behalf of Defense Metals, the team took a conservative approach. Basing its assessment on $100/kg long-term prices for Nd and Pr, and a 25% contingency on CAPEX, giving Defense Metals room to maneuver.

The fact that spot prices are already far above this, with the possibility of them going much higher, is very much in Defense Metals’ favor. Furthermore, if the price were to drop for any reason, Wicheeda still presents a profitable project.

To reduce reliance on the east is of vital importance and many companies are looking closely at how this can be achieved.

DOLE (NYSE: DOLE) has a $1bn market cap and offers a 2.9% dividend yield. A global leader in fresh produce, Dole grows, markets, and distributes fresh fruits and vegetables in over 75 countries. 2021 was a transformational year for the group. Revenue more than doubled, increasing from $4.3bn in 2020 to $9.3bn for 2021.

Intel (NASDAQ: INTC) is a US semiconductor and IT company with a $180bn market cap. It recently raised its dividend, taking the dividend yield to 3.1%. Intel is reorganizing its business units to capture areas of growth.

General Electric Company (NYSE: GE) is a long-standing industrial US firm with an $80bn market cap. The company is laying the groundwork for three independent companies focused on the future of flight, precision health and the energy transition. In Q1, the GE team improved services, orders, and cash while scaling lean in all businesses to drive margin expansion.

DISCLAIMER:  FN Media Group LLC (FNM), which owns and operates FinancialNewsMedia.com and MarketNewsUpdates.com, is a third party publisher and news dissemination service provider, which disseminates electronic information through multiple online media channels.  FNM is NOT affiliated in any manner with any company mentioned herein.  FNM and its affiliated companies are a news dissemination solutions provider and are NOT a registered broker/dealer/analyst/adviser, holds no investment licenses and may NOT sell, offer to sell or offer to buy any security.  FNM’s market updates, news alerts and corporate profiles are NOT a solicitation or recommendation to buy, sell or hold securities.  The material in this release is intended to be strictly informational and is NEVER to be construed or interpreted as research material.  All readers are strongly urged to perform research and due diligence on their own and consult =a licensed financial professional before considering any level of investing in stocks.  All material included herein is republished content and details which were previously disseminated by the companies mentioned in this release.  FNM is not liable for any investment decisions by its readers or subscribers.  Investors are cautioned that they may lose all or a portion of their investment when investing in stocks.  For current services performed FNM has been compensated twenty six hundred dollars for news coverage of the current press releases issued by Defense Metals Corp. by a non-affiliated third party.  FNM HOLDS NO SHARES OF ANY COMPANY NAMED IN THIS RELEASE.

This release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E the Securities Exchange Act of 1934, as amended and such forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. “Forward-looking statements” describe future expectations, plans, results, or strategies and are generally preceded by words such as “may”, “future”, “plan” or “planned”, “will” or “should”, “expected,” “anticipates”, “draft”, “eventually” or “projected”. You are cautioned that such statements are subject to a multitude of risks and uncertainties that could cause future circumstances, events, or results to differ materially from those projected in the forward-looking statements, including the risks that actual results may differ materially from those projected in the forward-looking statements as a result of various factors, and other risks identified in a company’s annual report on Form 10-K or 10-KSB and other filings made by such company with the Securities and Exchange Commission. You should consider these factors in evaluating the forward-looking statements included herein, and not place undue reliance on such statements. The forward-looking statements in this release are made as of the date hereof and FNM undertakes no obligation to update such statements.

Contact Information:

Media Contact email: editor@financialnewsmedia.com – +1(561)325-8757

SOURCE:   FinancialNewsMedia.com

The post How the US Can Reduce Reliance on China appeared first on Financial News Media.