Issue link: http://resourceworld.uberflip.com/i/1058321
12 www.resourceworld.com D E C E M B E R / J A N U A R Y 2 0 1 9 preparation for legalization in the US. So this bubble mode is going to last longer, as Canadian companies will continue to be development stories and suck out the oxygen from the junior resource sector for longer than expected," says Kaiser. "Sadly, it may get uglier before it gets better," Kaiser says. But it's not all doom and gloom for the junior mining sector. There could be a few rays of sunshine that could break through the impeding macroeconomic storm in 2019. First is the US plan to push through a US $500 billion infrastructure program to build bridges, roads, railways, schools and hospitals next year with aspirations of US $1 trillion build-out over the next decade. It's a plan that has bipartisan support and could help in rebalancing the resource sector. Under this plan, average US steel and copper demand growth would grow to 4.6%, reflecting an additional 4.0% annu- ally to the current demand. This would translate into an additional 1% of global steel and copper demand growth over the next four years which could tighten the global market balance slightly. "Any stimulus would help to turn around expectations in the mineral resource sectors," says Kaiser. Another major infrastructure proj- ect to keep on the radar screen in 2019 is the Chinese Silk Road Project which will encompass land routes and maritime routes with the goal of improving trade relationships in the region. Now, given the ongoing trade disputes with the US, there may be added urgency to moving the US $900 billion infrastructure plan forward. Beijing says it will ultimately lend as much as US $8 trillion for infrastructure in the 68 countries it intends to join through sea, rail and road route and as a result will increase demand for steel 5% per year or 20% by 2020. If these two projects were to move aggressively forward in 2019, there would be an accumulated 6% increase in global demand for steel. This would result in an undersupply situation for the raw materi- als and push metals prices upward and some of that money would trickle to the junior resource sector. The other driver for resource stocks in 2019 will be grassroots discoveries made in the US. "Given the US protectionist policies there will be a drive to secure domestic supply which has Americans thinking about developing their own resources. A back to America story," says Kaiser. The initial focus will be on those stra- tegic minerals which are not produced in the US, like cobalt, lithium, vanadium and zinc. The strategy is already playing out in the vanadium market which is poised to become the backbone of the US $13 billion energy storage market by 2025. The prob- lem is that in the US there are no active OUTLOOK 2019