The general political thought these days is that this is some grand terror:
China owns most of the cobalt mines in Congo, which has the majority of the world’s supply of this scarce material needed for the most common type of battery. American companies failed to keep up and even sold mines to their Chinese counterparts.
As a result, China controls 41 percent of the world’s cobalt mining,
By golly this is a horror and gosh darn it something must be done. A reaction that we really don’t understand ourselves. China is doing a large amount of the economic scut work and we’re all worried about that? They work, we get batteries and electric cars and this is a problem?
It’s not as if China is shafting us on the price of cobalt either. Just 6 weeks back an American cobalt mine was just ready to start operations. They didn’t - the cobalt price is currently below production costs. And yes, given the way mining works it is possible for prices to be below production costs for years, possibly even decades. So not only is China doing all that work they’re losing money on it and we’re gaining.
We really can’t see this as a major problem.
Of course, there is that worry that perhaps, once a monopoly position is gained then China will try to rook us. But we’ve seen that too. Back in 2010 one of us pointed out that China’s attempts to restrict rare earth exports weren’t going to work. We’d just open new mines if they tried. Fast forward to 2014 and the problem was over - new mines had opened and prices were below their starting point.
Addendum: Bonus points to Tim Worstall, economist blogger and rare earth dealer, who in 2010 at the height of the crisis pointed out that rare earths were neither rare nor earths and China’s monopoly had been won only by low prices that accrued to our benefit. “If Beijing wants to raise its prices and start using supplies as geopolitical bargaining chips,” he wrote, “so what? The rest of the world will simply roll up its sleeves and ramp up production, and the monopoly will be broken.” Nailed it.
If they try - if - then we know how to react. Our only real necessary action if they do is to make sure the Nimbys (and the BANANAs) don’t prevent planning applications. After that we can just stand back and watch markets work. The cost will be the same as trying to boost our own production right now but we’ll only incur it if we need to.
Behind this is a gross misunderstanding. The world’s really a very large place. There are plenty of places we can dig holes and gain cobalt - or lithium or rare earths, or whatever else people want to worry about. The trick is to only go mining when we need to. If China’s willing to do all that work - often enough at a loss - then leave ‘em be. There’s absolutely no point at all in insisting that we too must make a loss right now.