• Source: Economist: 24 Mar 18 "Goblin metals"         

    cobalt rushNote on the article title: cobalt derives from the Germanic "kobold" meaning a type of goblin. A similar story for "nickel". EV (electric vehicle) btteries typically require about 10 kilograms of cobalt. More than half the world's cobalt reserves are in the war-torn and chaotic country, the Democratic Republic of Congo.In 2017, 9,000 tons of cobalt were mined for EV batteries. That amount could increase to 107,000 tons by 2026.

    The company Glencore does most of the mining in Congo and currently, Chinese companies control one-third of Glencore's output. China is in position to control 95% (!) of the world's cobalt chemical market.

    EV batteries can be based on nickel-manganese-cobalt (NMC) or based on nickel-cobalt-aluminum (NCA). Reduce the amount of cobalt in either and bad things can happen (overheating, fires or short charge life).

    Nickel has not had anything like cobalt’s price rise. Nor do the Chinese appear to covet it. Oliver Ramsbottom of McKinsey, a consultancy, says the reason for this relative indifference dates back to the commodities supercycle in 2000-12, when Indonesia and the Philippines ramped up production of class-2 nickel—in particular nickel pig iron, a lower-cost ingredient of stainless steel—until the bubble burst. The subsequent excess capacity and stock build-up caused nickel prices to plummet from $29,000 a tonne in 2011 to below $10,000 a tonne last year. As yet, the demand for high-quality nickel suitable for EVs has not boosted production. Output of Class-1 nickel for EVs was only 35,000 tonnes last year, out of total nickel production of 2.1m tonnes. But by 2025 McKinsey expects EV-related nickel demand to rise 16-fold to 550,000 tonnes.

    In theory, the best way to ensure sufficient supplies of both nickel and cobalt would be for prices to rise enough to make mining them together more profitable. But that would mean more expensive batteries, and thus electric vehicles. Only a goblin would relish such a conundrum.

  • Article: "Our Bulldozers - Our Rules  

    The article looks at China’s plan to build a new “Silk Road” connecting Europe to Asia overland and to southeast Asia and east Africa by sea. The official policy is known as “OBOR” for “One Belt, One Road” (confusingly the Belt refers to the overland part and the Road refers to the ocean-going part). China is committing itself to $4 trillion in infrastructure projects in OBOR (over an indefinite time frame). But right now, officials say there are 900 deals underway worth $900 billion.

    OBOR matters because it is a challenge to the United States and its traditional way of thinking about world trade. In that view, there are two main trading blocs, the trans-Atlantic one and the trans-Pacific one, with Europe in the first, Asia in the second and America the focal point of each. Two proposed regional trade deals, the Trans-Pacific Partnership and the Transatlantic Trade and Investment Partnership, embody this approach. But OBOR treats Asia and Europe as a single space, and China, not the United States, is its focal point.”

  • Source: "The bad earth"  

    The World Health Organization estimates that smog in China contains ten times more pollution than what would be considered safe. Air pollution is visible but soil pollution, although less visible, is more of a problem. A 2014 soil survey conducted by the Chinese government (and kept secret for years) indicates that almost 20% of all farmland in China is contaminated with heavy metals like cadmium or arsenic, due to unregulated pollution from heavy industry. This is an area the size of all the arable land in Mexico. And this is a problem as soil can remain toxic for decades or even centuries and take years to clean up (it took the US over 20 years to clean up the relatively small Love Canal site in New York State). This is a further problem as China already has 18% of the world's population but only 9% of its arable land.

    Human impacts of soil pollution include China's "cancer villages" - these are 450 locations where there are unusually high levels of liver and digestive tract cancers amongst the inhabitants. There is also "cadmium rice" - a recent test conducted in the southern Chinese city of Guangzhou found that half the rice tested had high levels of the toxic metal cadmium. 

  • Source: "War games - U.S.and China trade"  

    US SuicideThe US under Trump wants to reduce the US-China balance of trade, now titled about $300 billion a year in favor of China. Also, Trump is citing intellectual property theft as a concern. " pressing American companies to hand over their technology when they form partnerships with Chinese ones (this is often a condition of operating in China), and by making it hard to enforce intellectual-property rights once a technology-related contract ends, the Chinese state has rigged the system against American companies."

    Blocking Chinese investment in US companies would reduce the threat of intellectual property theft. One action..."would be tighter rules on investment between the two countries. The details are unclear. The president can already block investment on national-security grounds, using the Committee on Foreign Investment in the United States (CFIUS)."

    Regarding the trade imbalance, it is caused by multiple factors. In fact,a high imbalance is a sign of a prosperous economy on our end. From the article: "Another risk stems from Mr Trump’s obsession with the bilateral trade deficit. No deal can guarantee to bring it down. Whatever the two sides agree to, the fact is that trade is devilishly difficult to manage. Factors beyond China’s control could easily overwhelm the impact of any deal on the bilateral trade deficit. Mr Trump’s cuts to income and corporate taxes mean that America’s economy is about to receive a large stimulus. All else equal, this will suck in imported goods."

    "As for Chinese investment in America, the CFIUS committee was already toughening its oversight. According to Rhodium Group, a research firm, this was part of the reason Chinese investment in America fell by 35% from 2016 to 2017 (a Chinese clampdown on outbound capital was the main factor). New rules that give wide discretion to the president, or block investment on economic rather than national-security grounds, could easily be abused."