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13/06/2024
Mining News

China leads in rare earth metals

The world is in a panic over China’s increasing dominance in the rare metals market. Despite Western governments dedicating time and money in recent years to catch up with the communists in this crucial economic sector, their efforts have been in vain. China is increasingly dominant in controlling key elements such as lithium and nickel, which are critical for the further development of the green agenda and vehicle electrification. Their companies lead in both quality and price because they secured the entire supply chain, from mining to factory production, more than ten years ago.

Indonesia is the world’s largest nickel producer, with about 20% of global reserves. A significant portion of the mines is owned by Chinese companies, which send the ore to China for electric battery production. At the same time, Western firms are closing mines because they cannot cope with the costs. Projects in Australia, Brazil, and the United States are losing investor support due to high expenses in these countries.

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According to the Wall Street Journal, the only cobalt mine in the US has shut down. Chinese ore is far cheaper and produced in large quantities. Meanwhile, China mines a significant portion of the world’s lithium, about 35%, a rapid increase from 18% just five years ago. In lithium processing, the situation is even more critical, with China now controlling nearly 70% of the processing of this key element, which is also a contentious issue in our country. This dominance has made them leaders in electric vehicle production and sales within two years. The following illustration is clear: China will predominantly sell electric cars in a few years.

The West is in panic and is already taking protectionist measures. The United States has raised the tariff rate on Chinese electric cars from 25% to 100%. Americans accuse them of creating overcapacity and deliberately lowering prices. As if consumers want increasingly expensive vehicles from Western countries that are no longer competitive. Economic battles with tariffs are a flawed approach because it won’t change the strength of Chinese manufacturers to offer fantastic vehicles at significantly lower prices.

Among the most aggressive players is Zijin Mining, a Chinese conglomerate that owns the copper mine in Bor. Their plan is to increase lithium production 85-fold. This goal will be achieved after purchasing a mine in Argentina that Western firms did not want to buy. Only Chinese companies showed up at the auction a few years ago, and Zijin won with a bid of $750 million. While Western countries moralize about the green agenda and corruption, Chinese communists quietly work and progress. They have quietly taken positions in Indonesia, Mali, Bolivia, and Zimbabwe. They are three times faster in project realization and bring significant economic benefits to poor countries. Although their environmental pollution history is infamous, Western firms do not have significantly advanced technology to preserve every aspect of nature around the mines.

China also has the advantage of state subsidies and a clear commitment to rare metals as a strategic goal. Western firms cannot turn to their governments when prices drop suddenly. Price volatility is always present in this market, so many do not want to risk their financial future with risky moves. Banks rarely decide to finance projects in risky countries where China is often the only player. All of this gives them a significant advantage in a world that is radically dividing.

All these elements make China the absolute ruler of this part of the economy. The rest of the world has yet to find an economic calculation to compete with them. This is another factor that will make the heated geopolitical situation even worse. Tariffs, media manipulation, and ultimately wars are often the results of economic upheavals.

Source : Fejsbučenje

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