Supervisor Vote on Borax Aid: A Tactical Play on Trade War Fallout

The immediate catalyst is a formal legislative step taken by the Kern County Board of Supervisors. On January 6, Supervisor Parlier moved that the board send a letter to the county's congressional representatives requesting support for Community Development Block Grant (CDBG) funding. The motion was seconded and approved, referring the matter to the board's Legislative Program Committee for further study. This committee will decide whether to send letters to Congress in support of the Rio Tinto borax mine in Boron.

The primary tool under discussion is CDBG funding, which Supervisor Parlier described as a key local tool for supporting county programs. The motion specifically calls for the board to consider a letter or other legislative options to seek a special designation or carve-out to protect jobs and the strategic deposit. Parlier framed the mine as strategically important to the county and nation, highlighting the urgency as retaliatory tariffs on borax from China are set to take effect next month. This move creates a direct, tangible channel for local pressure on federal lawmakers to act.

The Trade War Context: Borax in the Crosshires

The immediate tariff threat is not a direct hit on borax, but the broader trade war environment has created significant uncertainty for U.S. exporters. In February 2025, China retaliated against U.S. tariffs by imposing 10% tariffs on U.S. crude oil, agricultural machinery, and high-end cars. While borax itself was not explicitly listed in those initial retaliatory measures, the escalation set a dangerous precedent. The conflict has since spiraled, with both sides imposing multiple rounds of tariffs, including a recent 34% levy from China on all U.S. goods. This volatile backdrop means any U.S. export, including refined borates, now operates under a cloud of potential future restrictions.

The scale of the Rio Tinto borax mine in Boron makes it a major player in this high-stakes game. The operation produces approximately 1 million tons of refined borate ore every year, meeting about one-third of global demand. That output is shipped globally, with a significant portion destined for markets like China. This isn't a niche operation; it's a critical export facility whose viability is now tied to the unpredictable trajectory of U.S.-China trade relations.

The county's push for federal aid is a direct response to this uncertainty. With retaliatory tariffs on key U.S. goods already in effect and the potential for new ones looming, local leaders see a special designation as a shield. The goal is to protect the mine's strategic deposit and its workforce by securing a carve-out from future punitive measures. This move frames the mine not just as a local employer, but as a vital asset in a global supply chain that the U.S. cannot afford to lose.

Valuation & Risk/Reward Setup

The stock's recent performance shows the market is already pricing in some of the trade war risk. Rio Tinto shares are up 29.36% over the past 120 days and trade near their 52-week high of $85.46. This strong rally, including a 10.48% gain over the past 20 days, indicates positive momentum and suggests investors have been betting on a resolution. The valuation metrics reflect this optimism, with a forward P/E of 11.6 and a dividend yield of 3.5% that offers some cushion.

The tactical setup now hinges on the outcome of the county's legislative push. The supervisor vote creates a near-term catalyst, but its success is not guaranteed. The board's action only refers the matter to a committee for study; no formal letter or legislative text was adopted. The key risk is that this local pressure fails to materialize into actual federal aid or a special designation. If that happens, the stock could see a sharp reversal, as the recent gains may have been built on the anticipation of a shield from trade escalation.

In other words, the rally has been a bet on a favorable political outcome. The trade war backdrop remains volatile, with China having imposed 10% tariffs on key U.S. goods and the potential for further restrictions. The stock's elevated position means it has little room for error. Any negative news flow on the aid front could quickly test that momentum and expose the company to the very trade risks it was trying to avoid.

Catalysts & What to Watch

The tactical trade now hinges on a few clear, near-term events. The first and most immediate is the decision from the county's Legislative Program Committee, expected next month. This committee will determine whether to send letters to Congress in support of the Rio Tinto borax mine. A positive vote would signal that local pressure is building, potentially creating a legislative track for a special designation or carve-out. A negative or delayed decision would be a clear setback, removing a key pillar of the current support narrative.

Beyond the county vote, watch for any official statements from Rio Tinto or its U.S. operations, US Borax. The company's silence so far is notable. Any public acknowledgment of the county's efforts, or a statement framing the potential aid as a strategic necessity, would add weight to the catalyst. Conversely, a lack of engagement could suggest management sees little value in the local push, which would undermine the trade thesis.

Finally, monitor the broader trade war narrative for any new tariff announcements that could directly impact boron products. While the current retaliatory tariffs from China do not explicitly target borax, the conflict has escalated rapidly. The U.S. has leveraged authorities like the International Emergency Economic Powers Act to impose sweeping tariffs, and China has shown a willingness to retaliate across sectors. Any new U.S. action citing national security concerns under Section 232, or a Chinese move that includes refined borates, would immediately refocus the market on the mine's vulnerability. The county's push for a carve-out is a defensive play; new tariffs would make that defensive play a necessity.