Today is the start of a new era in world politics, with the inauguration of Joe Biden as the next President of the United States.
After four truly bizarre and crazy years of the reality TV show President Trump, a new (hopefully more stable) era is emerging for the world.
So what will the change in power mean for us?
Well, for people in Australia, the huge policy changes, particularly on on Infrastructure stimulus and Green Energy technology, will have significant impacts on our economy.
Biden is set to unveil a multi-trillion dollar US government program in 2021.
The stimulus is designed to pull America out of the pandemic by building new roads, rail, tunnels for transportation, ports, bridges and more.
The US government will also work to incentivise spending in those areas by the private sector.
Biden Administration US Transportation Secretary Pete Buttigieg, who will run the new agenda, said recently that the US will “…need to finally deliver on a big, bold infrastructure agenda that centers on jobs, equity and climate.”
The new US government will be spending big on steel intensive programs and green energy. This huge investment will have flow on impacts for us here on the other side of the world.
In particular, Western Australia, this will mean a huge boost for our raw materials, especially iron ore.
In fact with the price of iron ore is today near record highs, mostly thanks to the boom in Chinese demand as that government spends to keep their economy buoyant.
Now with the US going hard on “building back better” – so Biden says – there will be an even greater demand for iron ore supplies globally.
The supply chain is going to tighten.
Expensive Beer and Coffee Back?
This could mean a huge boon for Western Australia, in the form of new projects, jobs, wages increases and money rolling into State and Federal government coffers to help other parts of our economy.
It also means iron ore stocks will continue to see significant growth for investors. Not to mention the famed, mega-wealthy iron ore asset owners
As you may remember from the last boom that will also mean increase in property prices, rents and the cost of coffee and beer at local pubs and cafes.
It could also mean a stronger Australian dollars so when we can finally travel again overseas holidays could be even more tempting.
Huge Cash Splash
Before the election, Joe Biden called for a 10-year, $1.3 trillion plan. The plan also would target $400 billion over a decade for research and innovation of clean energy.
That could also mean a massive boom time for Western Australian mining companies looking to dig up minerals related to batteries.
The metals the world needs to make new generation electric cars and grid storage to ensure renewable power systems work well.
The green gold rush is well and truly on. Influential figures and organizations are rushing to find solutions to save the world from climate change.
For example Perth billionaire and philanthropist Andrew ‘Twiggy’ Forrest has spend the last 4-months travelling the world looking for green energy investment opportunities.
The trip took the Fortescue Metals Chairman to dozens of nations, including dangerous trips to Afghanistan, eastern Europe and South America, as revealed in the AFR newspaper this week.
“We have identified resources which in gigawatt terms would place us up there with the major energy companies in the world if we fully developed them,” Forrest said in late 2020.
Battery Metals Boom
That means companies in Perth, such as Galaxy Resources, Vulcan Energy, Core Lithium and many others could be on their way to making Perth investors and management significantly wealthy.
In fact, Perth based Vulcan is leading the pack. The west Perth lithium player is about to create a ‘carbon neutral’ lithium project. This will directly feed the hungry German car industry and rapidly greenifying EU economy.
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As another example, Perth lithium company Core Lithium said they were selling lithium to Tesla from their Northern Territory mines.
All of the aforementioned companies stock prices are up by massively since the start of last year alone.
Green Energy Storage
Companies exposed to big grid storage batteries, massive systems needed to help regulate the flow of power from solar and wind energy, will also do well.
Australian Vanadium is one Perth company likely to benefit. The company is working on both digging up the battery metals needed to create these grid storage solutions and manufacturing batteries that will need to be produced for it.
Perth battery storage company VSun Energy working on a battery for storage in Cockburn.
Hydrogen is another rapidly moving technology to power the green revolution.
With governments seeking to cut emissions the hunt is on to source hydrogen power made from renewable technology.
There are massive plans in WA to create renewable electricity to be converted into hydrogen, or a hydrogen derivative such as ammonia, in order to be exported overseas.
This energy will be then used in fuel cells and produce zero pollution, in theory.
This will mean Australian companies exposed to hydrogen and other low carbon intensive energy sources could also benefit in the medium term. Hydrogen could be a huge export for Western Australia with countries like Japan and Korea scrambling for more in recent months.
In fact, Andrew Forrest’s companies are heavily invested in making this happen over the coming years.
Rapid Sprint to Zero Carbon Economy
The Biden administration will be seeking to move the US economy to a low carbon intensive one as soon as possible.
The new administration will, on day one, sign the US back up to the Paris Treaty
The global treaty commits the country to dramatically reducing green house gas emissions in the coming years. The Trump administration tore up the treaty in 2017, despite almost every nation being on board.
An the benefits for Western Australia and Australia are not just coming from the US national policy.
Jay Jacobs, senior vice president and head of research and strategy at for an investment firm in the US said the world-wide trend of for the rapid greenification of the world.
“You look at states like California, which have said by 2035 they want to be carbon-neutral. You look at countries like the U.K. and France that are also looking at 2050,” he said.
“China, the world’s largest car market, is trying to reach carbon neutrality as well. So, this is a global theme being powered by a lot of different regulatory bodies who are all very quickly shifting away from internal combustion engines to lithium and battery technology and electric vehicles.”
CBS News in the US: Joe Biden stimulous
It would seem that, thanks to the change in US administration, the next commodities boom is here. For Western Australia and the results could be massive for us all but also bring their own set of issues.
More about the huge US investments that will boost WA’s economy.
Biden’s new Green Deal policy will be announced in February.
The “Build Back Better Recovery Plan” may not be dissimilar to Biden’s campaign plan which encompassed $2tr in investment stimulus, much tilted towards green initiatives.
This included a $400bn procurement investment to “Buy American” products, materials and services to support US manufacturing. Plus, another $300bn in R&D and “breakthrough technologies” ranging from electric vehicle (EV) technology to lightweight materials (think plastics) to 5G and AI (artificial intelligence).
The US $Trillion in “accelerated investment” was to be deployed during Biden’s first four-year term.
This includes building and repairing roads and bridges, ports, airports, water systems, electric grids and broadband; investing in the automotive sector from parts to materials to EV charging stations; building and upgrading rail networks and working towards zero-emission public transportation; investing in green power (solar, wind); upgrading 4m buildings and “weatherizing” 2m homes to make them more energy efficient; constructing 1.5m sustainable housing units; and investing in clean energy technologies such as battery storage, emissions technology, green hydrogen and advanced nuclear.
“It’s time to stop talking about infrastructure, and to finally start building infrastructure so we can be more competitive,” said Biden.
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