US President-elect Donald Trump picked two key cabinet positions last week, signaling he is serious about scrapping environmental regulations and speeding up of permits for oil, gas and mining projects – a policy that could put pressure on Canada to do so. the same.

Trump, who repeatedly promised that the United States would “drill baby, drill” for fossil fuels, named Lee Zeldina former congressman from New York, will be chosen on November 11 to lead the Environmental Protection Agency. Zeldin promised to abandon “left-wing” regulations while protecting the environment. He supported Trump’s call to use the EPA to pursue U.S. “energy dominance” and economic growth.

For Secretary of the Interior, a position that oversees the management and conservation of federal lands in the United States, Trump announced Doug Burgumgovernor of North Dakota – the nation’s third largest oil-producing state – as his choice. Burgum will also lead a newly created National Energy Council, which will focus on increasing America’s energy supply by better coordinating federal agencies and increasing power grid capacity.

Deregulation and faster permitting were key policies for Trump during his first term, and Frank Mariage, a mining partner at the Fasken law firm, says Trump’s choices show that he considers this matter to be unfinished.

Asset 2.0

“When Trump 1.0 came along, he put in place, through executive orders, a number of guidelines to begin to streamline the permitting process. Most of them were repealed when Biden came in,” says Mariage.

“So Trump is obviously going to look to reinstate them, and these appointments are a clear signal that that’s where they’re headed.”

Although the easing of environmental regulations has been focused on fossil fuels, mining will also benefit, says Patricia Mohr, a former Scotiabank vice president and economist. This will have repercussions in Canada, where obtaining permits is not as slow as in the United States, but still remains unbearable.

“If they do this south of the border, we will finally have to speed up getting permits in Canada. Otherwise, we will be left behind,” says Mohrwho also sits on the board of directors of Horizon Copper (TSXV:HCU) and is also the former editor-in-chief of Capitalight Research’s critical minerals-focused newsletter.

“It’s going to create pressure on us because in British Columbia alone there are at least six advanced-stage mining projects that could actually be funded and started. These are industrial mines, not gold mines. These things exist in British Columbia, but they need to be really pushed by the government to get going.

Mohr admits that the prices of some raw materials are not cooperating – nickel for example – but says that demand for copper has held up despite weak growth in China, which accounts for more than half of global demand.

As Trump unveils his picks for key positions, much of the media attention has focused on Trump’s support for fossil fuels, a reversal of Biden’s emphasis on fighting climate change and accelerating the energy transition through the Inflation Reduction Act and other laws. However, Trump also supports domestic production of critical minerals to reduce dependence on China, and has said U.S. production of copper and lithium should be maximized.

Most analysts don’t see Trump repealing Biden’s inflation reduction law as he promised, but it seems likely he will remove incentives for electric vehicles. Mohr says such measures will likely slow adoption of electric vehicles in the United States

“However, adoption in the United States so far has been quite slow, and so I don’t really think his policies will have that much impact,” she said. “I think it will be very difficult to slow down global interest in decarbonization, which means you will continue to have a lot of interest in renewable energy.”

Artificial intelligence

Trump says he wants to make the United States a leader in artificial intelligence (AI), which is expected to require enormous amounts of power.

According to figures from the International Energy Agency, data centers, cryptocurrencies and consumed AI 460 terawatt hours of electricity in 2022. It predicts demand will more than double to 1,000 terawatt hours by 2026, just four years later.

Unlike the enthusiasm for electric vehicles and projected demand over the past few years, which has now deflated, dragging lithium prices down with it, Mohr says the expected power demands of AI are not overrated.

That means nuclear power, which tech giants Microsoft and Amazon plan to leverage their data centers to power their data centerswill be a winner under Trump. The same will be true for the Canadian uranium sector, which is the second largest in the world.

“Interest in the nuclear industry and uranium has broad bipartisan support in the U.S. Congress,” Mohr said. “I’m not sure that Mr. Trump’s presidency will have a positive impact on the situation, but it will not be negatively impacted.”

Tax impact

Mariage says Canada will also need to think about ways to attract investment if Trump follows through on his promises to cut taxes.

“The extractive industry is very capital intensive and very risky, so everyone who works in the sector knows that high risk requires high reward.”

In Canada, the federal government has sent mixed signals on investment, with this year’s capital gains tax hike running counter to its plans to boost the supply chain and manufacturing of essential minerals, announced at the end of 2022.

“They are being ‘rah rah’ on critical minerals, but at the same time they are making investments more difficult. At the same time, we talk about streamlining the permitting process, but we don’t necessarily do anything about it.

Although the federal government has put pressure on the manufacturing side of the critical minerals supply chain, providing billions of dollars in funding for new electric vehicle factories and battery manufacturing, it has not done enough to ensure these factories can source locally, he said.

Considering Trump’s first term, when he imposed tariffs on aluminum and steel that did not initially grant special treatment to Canada and reopened the North American Free Trade Agreement , Canada cannot necessarily count on special treatment when it comes to customs duties.

“I would like to think that we have guaranteed cooperation, since they are our largest neighbor and in 35 states in the United States their main customer is Canada,” Mariage said. “But let’s not forget what happened with Trump 1.0.”

With potentially radical changes coming to the United States, the Canadian mining powerhouse will need to step up its game to maintain that reputation.

“There are going to be some pretty bold moves in the United States for the extractive industry that will attract investment,” Mariage says. “If we don’t do the same thing, people will look for investments south of the border rather than north of the border. »