Biden’s $2 trillion infrastructure plan to buttress metals prices amid green transition

US President-elect Joe Biden’s pledge to spend $2 trillion on infrastructure is expected to support base and battery metals prices – in the short term at least – as the world’s biggest economy embarks on a metal-intensive ‘green revolution’.

The details of the much-needed green infrastructure plan will be debated in Congress over the coming months on the back of multi-year highs for industrial metals, which have been boosted by an economic rebound in top metals consumer China and optimism around COVID-19 vaccines.

Although most of Biden’s plans will be subject to approval by Congress, there are some executive orders that he could implement quickly to spur on green policies, such as re-joining the 2015 Paris climate change accord.

“Biden’s $2 trillion proposed green stimulus would undoubtedly be positive for metals demand… (but) the election outcome means our base case view is that Biden will have to rein in his green spending ambitions,” said Jumana Saleheen, chief economist at consultancy CRU Group.

Some of the proposals in the plan include providing subsidies for electric vehicle (EV) purchases, adding 500,000 new charging stations and converting 500,000 school buses to zero emissions.

The charging stations and that number of battery electric buses would alone require nearly 200,000 tonnes of copper according to Jefferies, while renewable energy requires an estimated five times more copper than conventional sources.