REE Automotive Ltd REE

A Chinese Lake

[ThaiDiamond]

At its heart, the squabble was not only about the Senkaku islands, called the Diaoyu by the Chinese, where the boat collision took place earlier this month. Instead, it was likely a message to other countries with which China has territorial disputes, particularly in the South China Sea. This week China showed that it is willing to go to extraordinary lengths to exert its maritime claims. Lately it has taken to calling the South China Sea, which it disputes with five of its South-East Asian neighbours, a "core national interest". ("Out But Not Over, The Economist, Sept. 24th)


If China is willing to go to the lengths of the earth—like South America, Africa or expensively into Afghanistan—to secure raw materials, you can be sure there are going to be aggressive in the South China Sea.


This article from the Economist sums up the latest chapter in a series of incidents going on over the past couple decades or so (https://is.gd/frlEG). And the reactions of its neighbors here in Asia.


This is not new news. We've been reading about similar incidents for over twenty years.


As to whether China actually banned REE exports to Japan or not is an exercise in diplomatic intrigue—and an academic question.


They didn't have to. The "threat" of such action—with other economic sanctions—was enough to have the Chinese captain released.


Good risk management always dictates plans for contingencies.


What has been painfully obvious to a number of industry observers and early investors is that China controls the vast majority of the world's production for a series of commodities that are increasingly in demand. That fact has just gotten the attention of a whole new class of investors and to some degree, the general public. And to financial institutions who'll be called upon to fund the construction of new mines outside the Middle Kingdom.


The world needs a diversified source of rare earth elements. Right now that's spelled as non-Chinese sources.


This latest chapter added a new dimension to an old story—and brought that fact to the world's attention. And for companies that have viable projects in other parts of the world this is very good news indeed.