(Kitco News) – President Donald Trump issued an executive order on Thursday directing federal agencies to dramatically increase the speed and scale of mineral production on public lands – part of a global trend that’s playing out in the gold market in particular as prices reach new all-time highs and the reserve asset becomes ever more important for central banks.
The executive order calls for the creation of a list of U.S. mines that can be quickly approved, as well as a list of federal lands – including those controlled by the Pentagon – where minerals processing facilities could be built.
“The United States possesses vast mineral resources that can create jobs, fuel prosperity, and significantly reduce our reliance on foreign nations,” the order stated. “Our national and economic security are now acutely threatened by our reliance upon hostile foreign powers’ mineral production. It is imperative for our national security that the United States take immediate action to facilitate domestic mineral production to the maximum possible extent.”
The order lists gold, uranium, copper, potash, “and any other element, compound or material as determined by the Chair of the National Energy Dominance Council (NEDC),” and calls for an increase in “the mining, processing, refining, and smelting of minerals, and the production of processed critical minerals and other derivative products.”
The new executive order calls on every executive department and agency involved in permitting mineral production in the United States to coordinate a ramp-up of mineral production, with expedited milestones of between 10 and 45 days for various steps in the process.
It also aims to amend or reinterpret the existing Federal laws and regulations governing mineral production, including the Mining Act of 1872 and the Federal Land Policy and Management Act.
The President is basing the authority of the executive order on the Cold War-era Defense Production Act (DPA) in order to provide Federal financing, loans and other support for the domestic production and processing of a wide range of critical minerals.
Critical minerals including gold have increasingly been in the spotlight since the Russian invasion of Ukraine in 2022. In a recent interview with CNBC, Shaokai Fan, global head of central banks at the World Gold Council, said many nations are treating their gold reserves as increasingly important, and they are looking for ways to source it domestically.
“Geopolitics is a major driver,” Fan said. “Certainly, if you match up the timeline of when central banks have ramped up their gold purchases, it does line up to when the invasion of Ukraine started. Basically, central banks have now bought over a thousand tons of gold since 2022, 23, and 24. That's more than double their long-term average in the previous decade.”
“I do think the timing had something to do with it,” he added. “And the geopolitical element, the political risk of where the gold, where reserve assets are stored, I think that's been entering the minds of many central bankers around the world, too.”
Fan said that while the biggest buyers such as China, Poland, and India have obvious reasons for buying gold regardless of the source, countries like Kazakhstan and Uzbekistan are buying massive amounts of their own domestic production.
“The central Asian countries actually produce a lot of gold,” he said And there's an increasing number of central banks who buy gold directly from domestically mined sources as well. They're basically able to source a reserve asset, but pay for it in local currency.”
“We've been seeing this phenomenon become more widespread, not just in Central Asia, but in Africa, Latin America, and some parts of East Asia as well,” Fan said. “For them, it's obviously a strategic advantage that they can source a reserve asset locally, and then they can take advantage of when the gold price is high, for instance, to convert it to U.S. dollars if they wish.”
