Technology Metals: Can they boost the wider economy?
There is talk in the British newspapers about the manufacturing sector growing again, albeit slowly. But then you read that two steel plants, one employing more than 2,000 people, are closing (due to the collapse of the steel price, thanks partly to China exporting its growing steel surplus). For Western economies, from Europe to North America, some more dramatic solution is required.
Meanwhile, the latest issue of the magazine New Statesman has a special section on industry (one headline reading “Manufacturing Matters”, as if anyone said it did not).
Then London’s Sunday Telegraph devotes a full page to how Elon Musk and Tesla are taking on the Japanese car manufacturers – who are betting big on hydrogen as the fuel of the future – but with Musk sticking by batteries as his power source. And then there is the growing trend of acceptance that batteries, particularly lithium-ion ones, are the key to the future of renewable energy, the importance of storage being shown by news from Britain today that the country’s wind farms have a total capacity of 13,000 megawatts but the lack of wind recently has seen them generating only about 400MW. (Incidentally, I am writing this from Paris, after having travelled from Tokyo aboard a Boeing 787 Dreamliner, itself employing lithium-ion batteries in its power system.)
When it comes to technology metals, we might (or should) be talking about the downstream, too. In fact, these metals may be a story far bigger than finding them, mining them, refining them: they could hold the key to a kick-start for Western economies, which badly need to reverse the export of their industries to low cost jurisdictions.
We have seen an example of what possibilities might be with the Australian graphite company Talga, which started out by planning to process its Swedish graphite into graphene in Germany and has, more recently, joined the €1 billion European Union Graphene Flagship program.
When we look back at the rare earth industry at the height of its market appeal (in 2011) one recalls that there was much talk of the downstream end of the business. Companies were quick to boast if they had plans for a manufacturing arm as well as a mining one; others argued this was a mistake, that finding and mining rare earths involved skills a million miles from those required for the processing of those same rare earth metals into finished items. Today, we see emerging REE producers sticking to their knitting, and letting someone else do the value-adding. In graphite (as well as other technology metals) we see a similar trend.
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Oh, but that’s the market, people will argue. Japan and China have the established manufacturing infrastructure.
This is not a view proposed in the New Statesman (a left-leaning but venerable magazine) by Vince Cable, who was Britain’s Secretary of State for Business, Innovation and Skills until he lost his seat in the general election earlier this year.
He makes the point that manufacturing is the main generator of research and development, including the creation of intellectual property; the sector contributes disproportionately to productivity growth and standard of living; and is a major contributor to export income where it exists.
He allows that the market must work in its own way. But he also argues that governments must not be passive (as shown by Japan and South Korea where business and government work in tandem).
Cable is talking generally in terms of the manufacturing sector.
But Musk, if he succeeds with his gigafactory, will have shown that it is possible for Western economies to re-establish manufacturing growth by harnessing the potential of technology metals, just as Talga is seeking to do in Germany.
Technology metals are helping transform the mining sector: just 10 years ago there was scant talk (other than in specialty publications) about rare earths; even less about graphite which was then seen as mainly an industrial material. This has changed: now investors are quite savvy about these issues.
But perhaps it’s time to take this all a step further: to go beyond the discovery and mining, and see how these metals might restore and transform our industrial base.
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