December 04, 2022

China owns the Green revolution with falling prices of critical technology minerals

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Why haven’t the world’s senior miners (aka, the actual producers of non-fuel minerals as well as of oil, gas, and coal) alerted the global manufacturing industry to the limitations on the annual production of the critical mineral resources needed for any Green transformation of the world’s energy economy away from fossil fuels? The simple answer is that they’re making too much money with the nonsensical distortions of the fossil fueled energy economy led by natural resource production illiterates.

Buying back their stock to raise the share prices, so that the insiders (aka management and its bankers) seems to be the most common use of earnings among the seniors.

The seniors are, of course, the world’s suppliers of energy fuels and of structural metals, such as iron and aluminum, and infrastructure metals, such as copper. Those three metals constitute 95% of all the metals produced annually, and iron constitutes 95% of that total.

60% of all metals are produced or processed and utilized in manufacturing in just one nation – China. 90% of all of the critical technology metals necessary for a Green transformation are produced, processed and utilized in manufacturing in China!

It is actual Chinese demand for ALL metals that sets the production goals and prices charged by the seniors.

China now owns or has contracted to buy the critical technology minerals – for which it already has the capability and capacity to process and fabricate end-user products enabled by these same technology metals – sufficient to meet its domestic (world dominating) demands for years to come.

The critical metals China doesn’t already control are insufficient to support a green energy transition outside of China.

China has the pick of the litter of deposits and mines, globally. It has achieved this enviable position by not being concerned about price, but rather targeting national self-sufficiency in critical materials.

China will now allow “free market” capitalism to eliminate competition for the remaining critical mineral assets it doesn’t control. They are simply too expensive for private development even among the senior miners, whose goal is profit, not security of supply regardless of cost.

China’s industrial policy supported by state capitalism has achieved their goal of energy independence.

Oil from the Mid-East and (sanctioned) Russia, plus domestic coal and Kazakh uranium, ensure Chinese energy independence from imbecilic Western policies.

China’s attitude towards immigration also ensures that the great energy/food migration that is already occurring will not disrupt China’s economy internally.

Profit equals selling price minus cost of goods sold.

China offered enormous one-time profits to senior and junior miners producing or developing critical minerals.

It was a trick.

It worked.

The lesson is that an industrial policy supported by state capitalism to secure the supplies of critical minerals for national self-sufficiency in the world’s largest domestic economy has worked. Crony capitalism in the world’s second largest domestic economy has been an abject rudderless failure in that regard.

Low metal prices mean no profit means no domestic American security of supply.

Even subsidies (aka, state capitalism) cannot help in any short term, because the legacy skills to re-industrialize America have been de-emphasized to the point that American education does not support them at all.

Got it?

The new normal, “engineered and made in China.”

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6 responses

  1. Tracy Weslosky Avatar
    Tracy Weslosky

    ouch, re-read in slo-mo, “The new normal, ‘engineered and made in China’.”

  2. Bruce Barker Avatar
    Bruce Barker

    Gday Jack Perhaps it is when the hot topic of Defence NEEDS starts to take PRIORITY in Western World Governments thinking , that self sufficiency in various RARE EARTH and other critical metals becomes a matter of necessity rather than cost . Note this Article relating to discussions between Soth Korean and Australian Govt …https://breakingdefense.com/2022/07/south-korea-offers-aussies-new-subs-in-7-years-to-close-collins-gap/

  3. Jack Lifton Avatar
    Jack Lifton

    Bruce
    The problem is that the US Dept of Defense only ever considers just its own needs. For the DoD security always trumps cost. It’s the daily business of civilian manufacturing engineers to be aware of every aspect of a total supply chain. The purchasing agent MBAs at the Pentagon give instructions to well dressed agents of the systems integrators who take the orders for the capabilities not the construction of the required products. The DoD hired and internal experts know little or nothing of the mining and refining necessary for the fabricated parts to assemble their steel office chairs , much less their F35s and aircraft carriers. When addressing mining and refining they are just throwing money at a vague target to impress their political bosses.

  4. Simon Avatar
    Simon

    Puts Australia in a good perhaps even critical position.

  5. Jack Lifton Avatar
    Jack Lifton

    Simon
    I think you’re right. I see the future of critical materials sourcing as a nationalistic enterprise. Australia will have to decide what is best for Australia, not for any alliance that puts Australian interests in a secondary position. This is probably why the US stole the nuclear submarine contract from the French; to make Australian military interests more closely allied with those of the USA. I note that, notwithstanding that, ASM is becoming a major supplier to Korea of critical materials. The Australian government is clearly hedging its bets. America is not so good at great power competition as Great Britain once was. The American mantra of “every nation for us” (pun intended) is fading as a driver of world economic events.

  6. Simon Avatar
    Simon

    Jack I think we have a “chance” of establishing a rational “nationalistic enterprise” with our new government…. Having been a long term investor in ASM (previously ALK) I am pleased with their progress.

    Australia has nearly all of the so called “critical materials” resources and I think our future depends on us becoming very important to the “free world’s economy” to ensure our security.

    I have tried to enable this in my own small way via various websites that concentrate on the critical materials using http://www.alternative-energy.com.au as a focal point….

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