Democrats’ capture of Congress raises the prospect of greater scrutiny of President Donald Trump’s mining and energy agenda, even as pressure to lower electricity costs could create an opening for a bipartisan permitting deal.
The party won control of the House of Representatives and Senate in Tuesday’s midterm elections, setting up divided government from January. Investors face the possibility of tighter regulation of data centre construction and closer examination of federal investments, while permitting reform could provide common ground on energy affordability, according to assessments from BMO and Wood Mackenzie.
“While we see the likelihood for permitting reform, how policy is legislated and implemented remains a risk to the U.S. economy,” David Brown, Wood Mackenzie’s director of global integrated energy research, said Wednesday. “Entrenched partisanship could fuel policy stagnation and regulatory confusion.”
For miners, the election puts the durability of Trump’s mining agenda to the test. Democrats have already challenged Washington’s financial stakes in mining companies and questioned the terms of a bipartisan permitting proposal. Their stronger negotiating position could reshape that legislation, while scrutiny of data centres could affect a source of growing copper demand.
Greater scrutiny
Democrats’ concerns about federal mining investments predate the election. Senator Martin Heinrich and Representative Jared Huffman, the senior Democrats on the Senate energy and House natural resources committees, sought a watchdog investigation in August into financial safeguards and potential conflicts when Washington acts as both investor and regulator.
They asked the Government Accountability Office to examine how agencies assess investment risks, protect taxpayer funds and manage permitting decisions involving companies in which the government holds stakes.
Democratic control could also bring investigations into presidential family interests in companies, while appointments of officials, ambassadors and judges could be blocked or delayed, BMO said in a Wednesday note.
The prospect of stronger regulation could slow data centre development and soften inflationary pressures, the bank said. That contrasts with Wood Mackenzie’s assessment that pressure to lower electricity costs could encourage both parties to accelerate infrastructure approvals.
Gold gains
Gold and copper face different pressures from the result, according to TD Securities strategists Ryan McKay and Bart Melek.
Constraints on Trump’s fiscal agenda could limit further spending, helping push the dollar and longer-term Treasury yields lower and lifting gold back above $4,000 per oz., they said in a Wednesday note.
Copper initially weakened on the prospect of increased scrutiny of artificial intelligence data centre construction before recovering as tight physical supplies, particularly in China, supported prices, they said.
Potential AI regulation could challenge a major source of stock market gains, according to Russ Mould, investment director at AJ Bell (LSE: AJB). The British investment platform had £126 billion in administered assets at Sept. 30.
“Given that AI has been the key to considerable stock market wealth creation in recent years, the prospect of red tape could put the brakes on this hot investment theme,” Mould said in emailed comments. “However, a positive market reaction implies that certain investors are welcoming the potential that Trump’s political power may be curbed somewhat.”
Gold rose 2.7% to $4,038 per oz. in the early trading snapshot cited by Mould, who suggested investors were adding protection against uncertainty over Trump’s response to the result.
The election leaves metals tariffs largely outside Democrats’ immediate reach. Section 232 duties on steel, aluminum and copper products remain under presidential authority, as would potential tariffs on refined copper from January, BMO said.
Those tariffs survived Democratic gains in the 2018 midterms and are widely viewed as having strong bipartisan support, the bank added.
Permitting bargain
Wood Mackenzie’s case for a permitting deal rests on a shared incentive to reduce energy costs and a proposal already backed by senators from both parties.
The Bipartisan American Affordability and Jobs Act, introduced before the election, would overhaul federal environmental reviews and permitting. Republican senators Shelley Moore Capito and Mike Lee joined Democrats Sheldon Whitehouse and Heinrich in sponsoring the proposed legislation to accelerate energy and mineral development.
The package would strengthen review deadlines, restrict agencies’ ability to revoke permits and narrow the window for legal challenges. Wood Mackenzie highlighted two-year environmental impact reviews, a 150-day litigation window following environmental approvals and a nine-month timetable for evaluating dredge-and-fill permits needed for new gas pipelines.
But Democratic support for reform does not guarantee support for the existing compromise.
Huffman questioned the Senate package in a September statement, seeking stronger protections for communities, wildlife and renewable energy projects. He argued that Democrats should wait for greater negotiating power after the election.
“Folding our hand now or in the lame duck makes no sense,” Huffman said.
Trump would retain veto authority, and the impact of any legislation would depend on implementation by executive agencies, Wood Mackenzie cautioned. New renewable energy subsidies proposed by Democrats would be unlikely to overcome a presidential veto, the consultancy said.
Power pressure
Rising electricity costs could provide an incentive for compromise. Wholesale U.S. power prices could climb 46% between 2026 and 2035 under Wood Mackenzie’s base case as data centres and other infrastructure expand, the consultancy said.
It forecasts 166 gigawatts of net new gas-fired generating capacity over that period. Much of that development would require additional pipelines, making gas infrastructure approvals a potential constraint on electricity supply.
“Without reform, midstream bottlenecks are likely to return, stifling upstream investment and pushing regional gas and power prices higher, most acutely in the power-hungry Northeast,” Siddhant Warrier, Wood Mackenzie’s North American power research analyst, said. “Prolonged pipeline delays would also slow data center development, a high priority for both parties.”
Transmission construction faces similar pressure. High-voltage line completions in the 2020s have been running at less than half the rate of the previous decade, according to the consultancy.
Faster approvals would address only part of that problem. Allocating the cost of lines that cross utility territories and benefit several states remains contentious. Stat
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