Fortune Minerals : Cobalt News

MarketWatch - October 20, 2023

A narrative that the U.S. and China are going their separate ways misses crucial data points, write Joseph Quinlan and Ariana Chiu.

Uncertainty in the Middle East, and the attendant jump in oil prices, is a reminder to investors that geopolitical stress points are frequently commodity-intensive and often have knock-on effects on the supply and demand of strategic natural resources. This same dynamic applies to shifting U.S.-China trade relations…The U.S. share of imports from China has been declining, a fact that has been driven much attention. Since hitting a peak of 21.6% in 2017, China's share of total U.S. goods imports fell to 16.5% in 2022 and was just 13.5% over the first eight months of this year, the lowest level since 2004…But here's the rub: while the U.S. has been successful in finding alternatives to Chinese imports of motherboards, toys, sofas, and sandals, America's dependence on China for strategic and critical minerals not only remains high, but in some cases, has actually increased. China's role as the "factory to the world" is being recast as more firms diversify and derisk their global supply chains. But remember, China, in large part, is also the "refinery to the world."…When it comes to refining iron ore into steel or pulverizing cobalt into fine purity particles for batteries, most roads lead through China. The nation's processing infrastructure-think smelters, refiners, cracking activities, chemicals, and related capabilities-is second to none on a global scale. That is a potentially dangerous set-up for a country like the U.S., which according to the U.S. Geological Survey, is 100% reliant on graphite and manganese imports, 76% per cobalt,and 56% net import reliant on nickel imports….The U.S. is also significantly dependent on other countries for antimony, rare earth minerals, barite, bismuth, gallium, germanium, tantalum, yttrium, and many other minerals. The list goes on. Indeed, according to the U.S. Geological Survey's "Mineral Commodity Summaries 2023" report, the U.S. is now more than 50% net import reliant on 51 minerals, up from 47 from the prior report. And of these 51 minerals, China, as it happens, is the No. 1 supplier to the U.S. of 12 minerals deemed "critical." America's dependence on China for some of these commodities has actually risen over the past few years…In other words, when it comes to critical minerals to power America's green transition, and to support the U.S. semiconductor and defense sectors, the trend is for more, not less dependence on China…Decoupling is easier for garments than graphite. The inconvenient truth is that the U.S. remains wedded-coupled, even-to the refining champion of the world. Another truth: By imposing export controls on gallium and germanium earlier this year-two minerals used in the production of semiconductors and missiles-China served notice that it's not afraid to flex its muscle when it comes to refining strategic minerals for the rest of the world…The U.S. and its allies are serious about diversifying their mineral and metals supply chains, but efforts to diversify and derisk mineral supplies won't be as quick and cheap as flipping factories for sweatpants and hoodies. It will take years and a great deal of capital and the political will to overcome environmental concerns…In the end, the world we live in is far more complex and dynamic than the decoupling headlines suggest.