SMM Lead Market Morning Comment (July 22)

Could indium phosphide become a minor-metal issue with major implications at today’s U.S.-China summit? China introduced export controls and licensing requirements for indium-related items in February 2025, while expanding AI datacenter optical connectivity continues to lift demand for Indium Phosphide (InP) wafers, epiwafers and lasers. Following the leaders’ May summit, the White House listed indium among the critical-mineral shortages China would address, without announcing removal of existing controls. Whether today’s meeting will produce further clarity on InP export licensing remains uncertain. SMM believes an improved licensing process could ease overseas supply uncertainty; without progress, tension between rising AI optical demand and constrained material flows may persist.

Silver Bow Mining announced a non-binding term sheet with Ocean Partners UK for approximately US$88 million in funding and credit support to advance the restart of Rainbow Block, refurbishment of the Jefferson County Metallurgical Complex and working capital requirements in Montana, US. The proposed package comprises a US$40 million concentrate prepayment facility, up to approximately US$43.1 million in reclamation bond guarantees and a US$5 million lead commitment in a future equity financing. Approved replacement bonds are expected to release approximately US$42 million in cash collateral. The associated ten-year offtake would cover all future lead and zinc concentrates from Rainbow Block and ores outside Montana Tunnels’ M-Pit, plus one-third of those from M-Pit ores, with no minimum tonnage or take-or-pay obligations.