Brussels sprouts critical minerals plan

0:02Good morning from the Financial Times. Today is Wednesday, November 19th. And this is your FT News Briefing. Meta notched a significant legal W yesterday. And the European Union is trying to play catch-up with critical minerals. Plus, Elliott Management sees a golden opportunity with Barrick Mining. Yeah, we'll get there, I promise. I'm Mark Filippino, and here's the news you need to start your day.

0:35Meta does not hold an illegal monopoly. That's what a U.S. judge ruled yesterday. The Federal Trade Commission brought an antitrust case against Meta back in 2020. The agency wanted the company to unwind its acquisitions of Instagram and WhatsApp. But Judge James Boesberg said that the FTC failed to sufficiently prove that Meta gained monopoly power through a, quote, buy or bury strategy. Meta argued, hey, of course we compete. Rivals like TikTok and YouTube are vying for eyeballs too. Meta's share price jumped after the ruling was announced, but still ended the day down nearly three quarters of a percent.

1:17Critical minerals that are used in things like magnets and batteries are now a source of tension in the U.S.-China trade war. And the availability of these minerals, or, you know, lack thereof, I guess, has now put a strain on the European Union too. So the Bloc is taking measures in order to not be left out in the cold. DFT's Alice Hancock spoke to the EU's Executive Vice Chair of Industrial Strategy, and she joins me now. Hi, Alice. Hello, Mark. So Alice, you spoke to Stéphane Céjourné about the Bloc's plan for critical minerals. What did he have to say? So Céjol Né is in charge of putting together a fairly hastily pulled together plan to set up a kind of, he's describing it as a center to coordinate buying critical minerals, to try and secure supplies from other countries, to potentially fund things like recycling, and maybe look at other technologies to replace critical minerals.

2:14So for example, you can have graphite and you can make a kind of synthetic graphite so that you don't actually have to use the element itself. I flicked at this a little bit earlier, but why is this even necessary? Why go out of your way to make this central body? Yeah, good question. I mean, to wind back a bit, basically, these are kind of elements and metals and minerals that are really important for a lot of applications of things that the EU needs and wants right now. So they're used in a lot of magnets and batteries, and those go into things like wind turbines or electric vehicles and particularly defense applications, which at a time when the bloc is trying to upgrade a lot of its defense capabilities is very important.

2:55So the EU has realized probably a little bit too late that it's got to secure a lot of this. And most of those minerals are coming out of China. China completely dominates supply chains for critical minerals, particularly in the processing and refining part. And that has made the EU very, very reliant on China. as is the US, but the US has gone ahead and it's been buying stakes in critical mineral companies, and it's done a deal with Japan to secure supplies, whereas the EU has been caught a bit flat-footed. So that's the idea with this center is to try and catch up. Yeah, Alice, you've said now that this plan is probably a little hastily put together, a little too late, that the EU has been caught flat-footed.

3:42Can they actually catch up with this plan? I mean, that's a great question. And it's ironic because actually the EU put together what they called the Critical Raw Materials Act back in 2023. And the idea there was to do exactly this, to try and get more domestic supply of these things, to have some mining in the EU, and they set targets. But actually, because of all the bureaucratic processes in the EU and the red tape, a lot of that hasn't really happened. So now this is kind of an emergency plan to kickstart some of the stuff that should have happened two years ago. So what happens next, Alice?

4:18I mean, where does Céjournée's plan go from here? Well, the good thing about Céjournée's plan is at the moment, it's a European Commission initiative, which means that the Commission can kind of get on with it without having to get agreement from all the 27 member states. It's still being discussed within the Commission exactly how the plan will be shaped. And there are questions over whether there could be some legislation, for example, on price flaws for some of these minerals, or to kind of force companies to consider economic security issues within their supply chains. If there is legislation, that would need to be agreed with the member states.

4:53But if there is this kind of center that the commission can set up and put some EU money towards, they could get on with that pretty quickly. Céjolnet himself is actually going to South Africa. He's going to Brazil in the coming weeks to try and strike deals and to sign a memorandum of understanding to try and get EU access. So there's a lot of things the Commission can do in the coming weeks as long as they get on with it. That's the FT's Alice Hancock in Brussels. Thanks, Alice. Thanks a lot, Mark.

5:27It was another shaky day for tech stocks. The Nasdaq Composite and S &P 500 continued to dip before making up some of those losses. The Nasdaq is down 5 % in November. Investors are worried about high valuations for artificial intelligence companies, and traders are now becoming skeptical of big tech's AI investment spree. And speaking of companies that have benefited from the AI boom, we'll be watching how investors react to NVIDIA's quarterly earnings report today. The chipmaker's stock is up a whopping 31 % this year.

6:07shares in barrack mining rose yesterday after the ft reported that the activist hedge fund elliott management had taken a stake in the toronto-based company barracks really struggled this year but there are reports that it's considering splitting into two companies and that's brought on fresh interest from investors leslie hook broke the story of Elliott's investment in Barrick, and she joins me now. Hi, Leslie. Hi, Mark. So why has Barrick's share price lagged behind Rivals this year? Well, this year has been a really stellar year for gold miners, which have been pretty much the best performing asset class in equities.

6:44And Barrick's share price has risen. In fact, it's more than doubled this year, but it's had a lot of setbacks that mean it hasn't done as well as its peers. It lost control over a major mine in Mali after a dispute with the government. It also had several tragic safety accidents and three fatalities across different sites. And it's been investing heavily in a major project in Balochistan province in Pakistan. And that's raised eyebrows from some investors who feel that that jurisdiction might be too risky. Now, let's talk about Elliott's stake. How big is it and what's the significance of its decision to invest in Barrick?

7:26Well, our understanding is that Elliott has built a significant stake in Barrick, making it among the top 10 shareholders. And while we don't know the exact size or structure of this stake, it could be valued around 700 million U.S. dollars. And the fund has a history of activist engagement engagement in some of the biggest companies in the world. And it's also been quite active in mining companies. It has a stake in Anglo-American, for example. So Barrick has a new chief executive, Mark Hill. I think that's important to mention. Does this herald the change of direction for the company? That's right.

8:04So Mark Hill is the interim chief executive. He took over when the previous chief executive left fairly abruptly. And that change of leadership has also brought about a little bit of a shift of direction at Barrick. We've heard the new management talking a lot more about investing in Barrick's mines in North America, where it has some major mines in Nevada that it operates jointly with Newmont. And we've heard the management talk a lot about investing in these core assets in North America. So there's a little bit of a shift in tone from the new management. The board is still looking for a permanent chief executive, and we don't yet know who that will be.

8:47Leslie, what's next? What are you keeping an eye out for when it comes to Barrick? Well, Barrick is one of the world's biggest gold mining companies. It's the second largest gold miner by production, and it's a time of a lot of change for this sector. We've seen consolidation. We've seen record high gold prices. We've seen big investments from some of the Chinese gold companies like Zijin and Shandong. So there's a lot of change ahead. Now, in the market, we see analysts speculate that Barrick could perhaps break itself into two companies. Could we see an America's-based company and then a rest-of-world company?

9:25And we don't know exactly how management's thinking about that question. But one thing that a lot of people have said to me is that they feel like at Barrick, the sum of the parts might be worth more than the whole at this point. So there's probably a lot more changes ahead. That's the FT's Natural Resources Editor, Leslie Hook. Thanks, Leslie. Thanks, Mark. You can read more on all these stories for free when you click the links in our show notes. This has been your daily FT News Briefing. Check back tomorrow for the latest business news.

9:59Thank you.