When Rare Earths, Graphite, Lithium, and Uranium go to war they insure the peace and create the future.
We all know that individual, as well as institutional investors have only one goal, which is to make a return on their investment (a profit). This is not the purpose of government nor should it be. However it should be the goal of government to spend money wisely and, if that is so, then to spend some of the money it receives from its taxpayers on the research and development of technologies that have applications not only to the military (providing the security function of government) but also to the civilian economy for maintaining and improving public health and the general quality of life of that government’s citizens.
Beginning just before the American Civil War and continuing until this day both American security and the quality of life for its average citizen have benefitted more than that of any other nation in history from research everywhere into the elemental components of the universe and their applications in technology. Technologies are born more frequently from materials research than from any other branch of science. And materials science research has been driven more by war than by any other factor. This is not a moral judgment it is simply a fact. We are all so completely immersed in the world constructed from the structural materials, first-used-in-war, revolution of the late nineteenth and early twentieth centuries that its birth and development in the crucibles of the American Civil War, the expansion of the British Empire, the competition between Britain and Germany, and finally in the competition among Britain, Germany, Japan, Russia and the USA for world domination called the Second World War that today we simply accept high strength alloys of steel, aluminum, titanium, and magnesium as if they have always been there, and therefore that their universal uses and the need for their mass production is just obvious..
The Second World War gave us our age of technology and our need for technology metals. Thus we got from military research and development the key result of CHEAP solid state electronics and this gave rise to
- Affordable information technology management,
- Miniaturized displays of images and the faithful reproduction of sounds,
- Non-fossil fuel energy production, and
- The rich panoply of personal information and entertainment technology that is taken for granted by the masses of humanity and assumed to have always existed by those under 50!
New intellectual disciplines were required. There would be, for example, no computer programming without computers
Chemical engineering went from a sort of hit and miss to a data-driven science when it got:
- The computer,
- Corrosion resistant alloys and plastics,
- High speed pumps,
- Pressurized reaction vessels, and first and foremost
- Computer managed (programmed) chemical analysis and operations
Simultaneously with the above Mineral Exploration got extreme sensitivity spectroscopy, portable spectroscopy, and GPS all of which resulted in the rapid elimination of areas marked “unexplored” from the world’s geological survey maps.
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Mining itself got:
- Powerful mechanized digging and tunneling machines,
- Conveyors capable of moving thousands of tons per day over enormous distances,
- Corrosion resistant alloys, and
- Totally mechanized road building, bridge building, and vehicular transport
All of these advances were paid for at their inception by governments looking to improve their chances of winning wars in competition with others, existing or perceived “enemeies,” who it was believed were doing the same.
In chemistry for example the high explosives being developed for mining begat high strength metallurgical research for steel that could withstand the pressure of the new explosives and use this energy to propel larger and larger shells from immense cannon. This is remembered as
The battleship race, which in fact was a race to see who could first develop large caliber, high muzzle velocity, rifled cannon and the armor that would defeat the enemy’s use of the same weapons. The “battleship race” became the model for all other “races” down to our own time including the development of the ballistic missile, the guided missile, the jet propelled military aircraft, the atomic bomb. Star Wars is simply a continuation of the battleship race by other means. It was an issue of materials science superiority coupled with the ability to mass produce the devices made possible (enabled) by the materials science discoveries.
The airplane needed light weight high strength alloys and light weight electrical and electronic controls;
The Battle Tank needed powerful light weight Internal Combustion engines needing all of the above materials and technologies,
Rockets and then jets required high strength temperature stable steel and powerful explosives (fuel);
Display technologies, beginning with the Cathode Ray Tube and then progressing to the “flat screen” were developed to reduce the weight necessary for using displays in air and space-craft.
Then came Nuclear weapons with the largest expenditure (in constant dollars) ever to develop a “man-made “material, plutonium metal, and to recover kilogram quantities of an isotope, Uranium 235 that without the wartime forceddevelopment of large scale electromagnetics and of the simultaneous development for the handling of corrosive gases and of intensely radioactive materials simply could not have been done.
Solid-state electronics rose in war from the need for light weight radar sets. The open ended (without regard to cost) research to make and study the electronic properties of ultra-high purity metals, alloys, and compounds was the key development that led directly to our modern age of technology metals!
Not to be forgotten is also the fact Battlefield medicine begat mass production of antibiotics regardless of cost, and so on and on…
From all of the above historical outline investors need to learn one thing, and that is that laboratory experiments usually cannot be replicated at large scale not because they don’t work, but because it, the scale-up to mass production, is too expensive. The best example of this is the civilian nuclear program. Neither Uranium 235 nor Plutonium 239 would have ever been commercially available if it were not for the military-political decision to develop nuclear weapons without regard to cost.
Thus when I hear the glib phrase “Manhattan Project” used to describe an all-out commercial or even governmentally backed program I immediately think of open-ended costs that will never and could never be approved by budget planners and accountants in the private sector.
America and Europe and Japan have been and are centers of materials’ based technological innovation. This means that as soon as military research has provided information on the properties of a material and, in many cases, even caused that material to be produced UNECONOMICALLY then, and only then, entrepreneurs, who are sometimes engineers and scientists, can try to develop commercial civilian uses for the materials so that private enterprise can determine if such uses justify producing the materials in quantity.
Today, in 2014, almost 2015, we in the non-Chinese world are on the cusp of a revolution in weaponry that will require vast amounts of the critical rare earths and of a recognition that for security these rare earths must be supplied from outside of China. The new rare earth demands are for:
- Vehicular armor;
- Light weight high strength alloys of aluminum and magnesium for airframe construction;
- Lasers for offensive as well as defensive weapons;
- Projectile weapons of all sizes using electromagnetic force and therefore —
Along with the increasing needs for rare earth permanent magnets in electronics and controls there can be no doubt that all of the production of the critical rare earths possible outside of China will be needed if these uses are to come into being on top of the growing need for such materials in mass produced goods for the civilian economy.
Most non-Chinese Global 1000 firms that require rare earth enabled components in their products have until even now just ignored the supply issue by assuming that they could always get the materials by just offering more money. But this myopia is now ending. I predict that major firms will announce within a year or less programs to acquire and develop or j/v with and develop technology metals resources BOTH of MINES and SEPARATION/REFINING TECHNOLOGY so as to assure themselves of reliable secure supplies.
This is why I am only watching junior rare earth, graphite, and lithium ventures that have recognized that they MUST be paired with an economical, affordable, separation and refining technology. Traditional refining technologies are too costly for the large amounts of materials now to be needed!!
Invest in the future. The only thing I have to invest personally is my time, and I hope that I choose where to spend it wisely. The future as I see it belongs to those who catch the processing technology wave now building to sharply reduce the costs of technology metals and materials.
Jack Lifton is the Sr. Editor for InvestorIntel Corp. and is the CEO for Jack Lifton, LLC. He is also a consultant, author, and lecturer ... <Read more about Jack Lifton>