Do mining ETFs count as HALO trading? | Jiuli Sheng

In 2026, the global critical mineral supply chain is facing unprecedented challenges. China's dominance in key metals such as rare earths has exposed the most serious strategic weakness of the West for many years. The United States is set to launch the largest commodity market intervention in decades, targeting the supply sources of 60 critical minerals; coupled with export bans from resource countries that have struck the global lithium supply chain, the wave of "mining nationalism" continues to heat up, potentially driving up gold mining ETFs. Geopolitical Risks Fail to Trigger Mining Stock Sell-off In the past six months, the S&P 500 index has returned about 8%; during the same period, the U.S. mining sector (XME) rose by 48%, and the international mining sector (PICK) even increased by 57%. Hong Kong, which aims to develop into a global gold trading market, also launched its first ETF focused on global gold mining companies earlier this year. Recently, geopolitical risks have not triggered a sell-off in mining stocks; instead, stock prices have risen, marking the first occurrence in 30 years where the market has shifted from merely betting on industry growth to strategic investments linked to national security, supply control, and national power. Zimbabwe Triggers Shockwaves in the Lithium Supply Chain At the end of last month, Zimbabwe's Ministry of Mines suddenly announced an immediate suspension of all unprocessed lithium ore and lithium concentrate exports, with the ban taking effect immediately and applying to in-transit goods. The aim is to strengthen mineral regulation, promote local deep processing, and retain resource value domestically, which took market participants by surprise. A longer buffer period was originally expected, but this policy has completely disrupted the existing rhythm, quickly triggering severe shocks in the global lithium supply chain. Lithium carbonate futures saw a limit-up during trading. According to forecasts, Zimbabwe's expected production in 2026 is 235,000 tons, accounting for 12% of the global total; this ban may affect about 150,000 tons of lithium carbonate equivalent annual supply, exacerbating supply-demand tension expectations. Mining nationalism refers to the actions of resource-rich governments that strengthen their sovereign control and revenue extraction over domestic minerals through export restrictions, mandatory local processing, increased taxes, and even nationalization. This transforms resources from market assets into tools for serving national strategies and industrial upgrades, as seen in recent years with Indonesia's restrictions on nickel ore exports, Congo's implementation of cobalt quotas, and Chile's push for lithium nationalization. The pursuit of value chain upgrades aims for higher added value while enhancing employment and tax revenue, but it also increases uncertainty in the global supply chain, intensifies price volatility, and makes geopolitical risks a norm. China Advances Mineral Exploration Breakthrough Strategy Major powers are adopting proactive response strategies. Guided by the "National Mineral Resources Overall Planning (2021-2025)," China has identified a list of 36 strategic minerals and is advancing a new round of mineral exploration breakthrough strategy, addressing the issue of "enclosed but unexamined" to release domestic production capacity, while implementing total control over rare earth mining and smelting separation. On the technical front, China has overcome the efficient extraction of low-grade scattered metals, breaking the foreign monopoly on high-end products and promoting a self-sufficiency rate of over 70%. In terms of overseas layout, since 2025, Chinese enterprises have acquired quality assets such as Indonesian coal mines, Ghanaian gold mines, and Brazilian nickel industries through mergers and acquisitions, and have established a complete industrial chain in Congo and Zambia, striving for diversification and deepening compliant cooperation. The United States Incorporates Critical Minerals into National Security In the face of China's dominance (for example, mining 80% of the world's tungsten and refining 99% of gallium), the United States has taken action by releasing the "U.S. National Security Strategy (2025)," incorporating critical mineral security into the core of national security and strengthening comprehensive control. The U.S. Geological Survey released the final version of the critical mineral list last November, expanding from 50 to 60 minerals, adding copper, silver, uranium, phosphates, etc., as the legal basis for federal subsidies, expedited approvals, and other policies. Additionally, the U.S. has initiated national security tariff investigations on the processing of critical minerals and downstream products, with tariffs or quota restrictions to be implemented if no agreement is reached. At the same time, the "Project Vault" has established emergency reserves for 35 critical minerals, simplified domestic project approvals, and prioritized procurement rights for allies and resource countries to enhance supply chain resilience and reduce dependence on a single source. Combined with a total of $12 billion in public and private funding, this aims to stabilize prices, support domestic production, and withstand supply shocks. For the Trump administration, national security means "America First," which is transforming into a competition for scarce resources. Even if the effectiveness of military alliances is questioned, cooperation on natural resources remains essential. Europe has engineering expertise, while Japan has experience in securing supply chains. In the face of China's geological advantages, diligence, and political system, the ability of the U.S. to cooperate with other countries is its greatest asset. On one hand, this is to guard against the risk of China cutting off exports again and to raise the cost of further restrictions; on the other hand, it is to cultivate pro-American markets and avoid excessive intervention that weakens price signals, while U.S. actions primarily follow three key principles. First, narrow the scope. Not all 60 minerals are truly critical; aluminum, lead, and zinc are abundant, recyclable, and substitutable, while the vast market for copper is also hard to monopolize. Therefore, focus can be placed on the metals that China can most easily restrict exports of and are most critical, such as certain rare earths. Second, make good use of all tools. Targeted reserves can meet immediate crisis demands, and fixed-price procurement contracts can attract private investment and promote project initiation. At the same time, emphasis should be placed on refining and processing. Countries with conditions can change their economic budgets to accelerate domestic and allied processing capabilities. Third, ensure price signals are transmitted. Only when both buyers and sellers face high prices during supply tightness can the economy continue to adapt, innovate, and save; conversely, low fixed prices will only exacerbate dependence. While subsidies and reserves are necessary, they are also costly. Focus on gold, power grids, and mining themes Amid the gold price boom, there is an increasing investment demand for precious metals and mining recovery. E Fund has seized the opportunity to launch a gold mining ETF (2824), closely tracking the performance of the Solactive Global Gold Mining Select Index, which tracks gold mining companies listed in major global markets (with a focus on Hong Kong). Short-term prices may be affected by global gold markets, geopolitical factors, and U.S. critical mineral policies, while long-term trends depend on gold price trends and mining company profitability. Additionally, the so-called "HALO trading," characterized by "high asset intensity and low elimination risk," is also worth noting, with themes including power grids and mining in long-cycle industrial capacity. Jiu Li Sheng Facebook page Related articles: AI semiconductor stocks "three hot and one cold" | Jiuli Sheng