West scrambles for ‘insurance policy’ as China raids CMs Interesting read; reminds me of how many rare earth mineral miners succumbed to low Chinese prices 10 - 15 years ago. This time though, the likes of Fortune Minerals will have different outcomes because of our governments awakening, their financial support and FTs ace up their sleeve - GOLD. Some interesting quotes from article ...
The Idaho mine is barely big enough to meet 10pc of US cobalt demand, Crocker explains. But with the vast majority of world supplies extracted from the Congo and refined in China, even small amounts of American production would make the difference in a crisis.
“They brought that online overnight, crushed the cobalt price, and rendered our mine uneconomic,” says Crocker.
“Often, you’ll see Western companies starting to drop out. But the big Chinese players can power through on lower margins.”
A belated realisation of this by Western governments has triggered an attempted rearguard action. The Inflation Reduction Act, passed by American lawmakers in the wake of the pandemic, included hundreds of billions of dollars of subsidies and new requirements that will incentivise car manufacturers to source more minerals domestically.
By 2027, the act also specifies that 70pc of the minerals in US-made EV batteries must come from US miners or recycling plants – or mines with free trade deals with the US. Much of these are expected to come from Canada, where there are rich seams of the required metals in areas including Ontario and Quebec.
At the same time, the US Department of Energy and even the Pentagon are providing funding to mines and refineries at home which officials now view as vital to US security.
“It will have to be policy that drives [Western] capacity, through enforcement or financial motivation, to account for the fact that it is simply going to be more costly to do this outside of China.”
She argues Western firms will have to compete on other grounds, such as quality and carbon emissions, to sell at a premium. “This is meant to be about the green revolution, but often the supply chains aren’t as sustainable as you would like. So that’s a hot topic with automakers and is another driver for different sources of supply.”
Even on that score, Jervois’s Crocker sounds a positive note. His company is currently working with the Pentagon to expand the size of the US’s mine and open a potential refinery, helping to make the overall proposal more economically viable.
“We don’t need a 90pc market share, just a share that allows the portion of the product that goes into certain industries, which are genuine and critical, not to be cut off in the event of geopolitical unrest,” he adds.
https://finance.yahoo.com/news/china-crushed-west-race-power-050000870.html