
What if China corners the cobalt market? - devy
https://www.economist.com/news/finance-and-economics/21739161-nickel-could-make-good-substituteprovided-car-batteries-dont-catch-fire-what-if
======
jseliger
The same thing that happened when China "cornered" the rare earth metals
market: other mines were opened and a temporary advantage mostly disappeared.

The same will happen here.

In addition, cobalt can be recycled from existing batteries, but it is
currently not economical to do so. When you can trade existing batteries to
Best Buy for a couple bucks, you'll know the price of cobalt (or nickel, or
lithium) is genuinely high.

People interested should read _Junkyard Planet_ :
[https://www.amazon.co.uk/Junkyard-Planet-Travels-Billion-
Dol...](https://www.amazon.co.uk/Junkyard-Planet-Travels-Billion-Dollar-
Trash/dp/160819793X)

~~~
devy
Yep. The author actually summarized it pretty well in the last paragraph:

    
    
          In theory, the best way to ensure sufficient supplies of
          both nickel and cobalt would be for prices to rise enough 
          to make mining them together more profitable.

~~~
kazinator
Of course, that works because "sufficient supplies" is defined as "sufficient
at price X to those who are willing to pay X" not "sufficient for those who
only wanted to pay the original price".

The principle works for anything at any price, nearly vacuously.

For instance, there are sufficient supplies of Lamborghini automobiles,
ensured by the price being high enough that making them is profitable.

~~~
OrganicMSG
Yep, but it is a useful concept with certain minerals and products. For
instance, the vast majority of the cost of producing a lithium battery is the
big oven to dry them out before sealing them, the price of the lithium itself
is way down the list and could effectively double before it massively affected
battery costs. However if the price does double, suddenly lithium is
economically available pretty much everywhere.

~~~
kazinator
Thus if there is a niche use for some material, and that something is very
cheap, but that niche use itself is profitable, then that industry somehow
ensures that it has enough of the material just for itself. Maybe by owning
the production chains of that material; those units don't have to stand alone
as profitable. Outsiders can't easily get the stuff, though. If the stuff
becomes independently profitable, then the availability follows.

~~~
OrganicMSG
These thing can happen by accident also. If it is generally known that there
are only a few places in the world that you get lithium from, then investors
are going to think that lithium is very risky and may run out. They don't tend
to think, "Hey, it is the third lightest element, in theory there should be
loads of it, perhaps we are only mining the cheapest possible sources", which
is the actual truth of the matter. So while the people inside the industry
might know the potential availability, investors on the whole do not and so
the market only gets enough money to expand conservatively, rather than enough
to kick off a magnitude more resource acquisition at a significantly higher
raw material cost.

------
RobertRoberts
A similar thing happened to rubber during WWII when natural rubber resources
were compromised. (If anyone is in doubt about the nature of the US
relationship with China, consider this news story. [1])

> _" When the natural rubber supply from Southeast Asia was cut off at the
> beginning of World War II, the United States and its allies faced the loss
> of a strategic material. With U.S. government sponsorship, a consortium of
> companies involved in rubber research and production united in a unique
> spirit of technical cooperation and dedication to produce a general purpose
> synthetic rubber, GR-S (Government Rubber-Styrene), on a commercial scale."_
> [0]

It seems that tech companies and the governments of the world just need to
either find more resources and control them. Or find new ways to make
batteries with different tech/chemistry. (The second option seems the smartest
long term, just like rubber tech)

[0]
[https://www.acs.org/content/acs/en/education/whatischemistry...](https://www.acs.org/content/acs/en/education/whatischemistry/landmarks/syntheticrubber.html)

[1] [https://www.washingtonexaminer.com/policy/defense-
national-s...](https://www.washingtonexaminer.com/policy/defense-national-
security/fcc-wants-chinese-tech-out-of-us-phones-routers)

Edit: Years ago a client of mine made software for satellites for an unnamed
massive defence contractor. They were control systems for satellites that
killed other satellites. He was doing this work in the 90s. Late 90s he said
the US's biggest enemy was China.

~~~
coldtea
> _Late 90s he said the US 's biggest enemy was China._

Well, biggest competitor. For enemy it should have also actually done
something, and until now it's mostly been western nations doing things to
China
([https://en.wikipedia.org/wiki/Century_of_humiliation](https://en.wikipedia.org/wiki/Century_of_humiliation)).

Besides, who else would have he said at the late 90s? Russia was a faltering
non-entity under Yeltsin, and China was emerging and a billion+ strong.

~~~
scythe
China's territorial expansion in the South Pacific and support of anti-
American political parties in e.g. Cuba and Venezuela is certainly enough to
warrant Stephen Colbert's suggested title "frenemy", not to mention their
continued international temper tantrums over the status of Taiwan.

It should be noted that the US put an end to colonial expeditions in China
with the Open Door Policy in 1899. The "Century of Humiliation" article
enumerates complaints about the colonial expeditions but does not mention any
US actions or the ODP, the latter, I assume, being considered not humiliating.
It's hard for me to imagine why the US should be lumped in with
Britain/France/Russia/Japan in the period before 1949. After that we were at
Cold War, of course.

~~~
jonathanyc
> China’s ... support of anti-American political parties in e.g. Cuba and
> Venezuela is certainly enough to warrant Stephen Colbert's suggested title
> "frenemy", not to mention their continued international temper tantrums over
> the status of Taiwan.

How can you not see the contradiction in this sentence? You say that China
supporting anti-US elements is them being aggressive—sure. But then you
characterize China’s opposition to Taiwan, which continues to exist arguably
solely because of US support, as a “temper tantrum.” How is this supposed to
be Chinese aggression, any more than the Civil War was the War of Northern
Aggression?

The GP’s point is that it has mostly been the US being aggressive towards
China, rather than vice versa. It is definitely possible to argue against, and
it is definitely possible to argue that China should try to get along with
Taiwan. This I would agree with.

But your argument is self-defeating and plain inaccurate. (Also,
characterizing the Open Door Policy as not an aggressive action is also plain
wrong. Would you characterize Commodore Perry’s expedition to Japan as non-
aggressive as well?)

~~~
scythe
Whether the US's support of Taiwan is aggressive is immaterial; nowhere did I
suggest that the US has taken no aggressive actions against China. I responded
to a claim by 'coldtea that China has taken _no_ aggressive actions against
the US and I make no claims regarding degrees. US aggression towards China
does not reclassify actions by China as nonaggressive.

China's actions regarding Taiwan are nonetheless absurd because it was
basically a colonial possession of the Qing Dynasty, having not been part of
China before the 17th century, so China has no serious "historic" right to
claim it aside from nonbinding agreements between the US/RoC during WWII. That
the PRC would wish for those agreements to be binding is ironic considering
their characterization of the RoC as a US puppet state.

~~~
coldtea
> _US aggression towards China does not reclassify actions by China as
> nonaggressive._

It might well reclassify them as defense.

At worst, it puts them in perspective.

Else, it's like saying "someone fighting back a bully does not reclassify his
actions as nonaggressive".

>* China's actions regarding Taiwan are nonetheless absurd because it was
basically a colonial possession of the Qing Dynasty, having not been part of
China before the 17th century, so China has no serious "historic" right to
claim it aside from nonbinding agreements between the US/RoC during WWII.*

So, the US would for example would easily give away California to Mexico,
Hawaii or Puerto Rico to the natives, etc, if it came to some schism, right?
After all, they're way younger possessions than a 17th century one.

(And it's not just about state ownership -- China itself was divided in many
ways over the course of history. It's about common culture and ethnicity, not
about it being a part of the "official state" since forever. Taiwanese are
settlers from China, and even the previous local (aboriginals) had come from
China).

~~~
scythe
>It might well reclassify them as defense.

>At worst, it puts them in perspective.

The context is "For China to be considered an enemy it ought to have done
something." Defense of any form obviously satisfies this requirement. You are
only arguing semantics.

But in Taiwan, China is the bully, and the US defends peace.

>the US for example would easily give away California to Mexico

The US controls California. If we lost it, it would be ridiculous to spend 70
years threatening war against anyone who suggested we should admit it.

>Taiwanese are settlers from China

Americans are settlers from England.

------
baybal2
When it comes to trade war topic these days, most Western commentators
completely miss that a trade war is what China was preparing intensively for
the last quarter of a century. They well expected an economic pressure on a
scale even bigger than what the West puts on North Korea and banana republics.
They totally understood that the West will not play nice with them forever.

There is zero questions about China's economic policy being very strategic,
and deliberate. Chinese state conglomerates may look to just littering around
the world with money, but analyze it more, and you see a pattern, one that is
very much like a game of Go - victory by limiting enemy moves.

They buy ally countries, strategically - they buy resource supplying
countries, often with major holds on markets of vital commodities.

Their tech purchases - mostly underappreciated market leaders with industry
wide influence. Kuka - the only company you can say to be Tier 1 in robotics,
all other competitors combined will not be an equivalent for it. I has almost
complete dominance over major heavy industries. Lattice Semi - the one and
only FPGA company that can threaten the Xilinx-Altera duopoly. And so on and
on and on.

Their domestic tech development - even more so. People talk about China
dominating consumer goods manufacturing without realisation that it has even
bigger hold of manufacturing machinery industry - manufacturing can't really
leave China with Chinese made manufacturing equipment being locked down.

The whole industry you can call "Manufacturing machinery 2.0" is a domestic
Chinese development. Biotech - China quietly ate the market for genetic
engineering reagents, as well as much for complex organic chemistry. There are
megatons of biotech startups in the West, but they all feel that they will
eventually have to move to China to have any chance to scale - effectively
they are already a Chinese property.

Military allies - well, there things are even more obvious.

Major trade agreements - same. Their idea is to bind any major developing
market niche to Chinese economy before the West even realizes its emergence.

Their idea - to make it so that if somebody wants to do anything any much big
being impossible without involving a Chinese company or state institution at
some part of the process - to make it "You can't do that without China"

~~~
wallacrw
And yet, the moment you want to move any of those resources from one place to
another, you must deal with the US Navy, which, without meaningful resistance,
can control all global shipping lanes at will.

[https://en.wikipedia.org/wiki/List_of_aircraft_carriers#Numb...](https://en.wikipedia.org/wiki/List_of_aircraft_carriers#Numbers_of_aircraft_carriers_by_country)

When it comes to limiting moves, no country has the ability that the US does.

~~~
baybal2
Indeed, this is currently missing from Chinese strategic calculations. While
they do seem to be scrambling to build a navy before the good times end, they
do that not to 100% of their abilities.

------
joshe
A 2017 Tesla battery has 4.8 kilograms of cobalt [1]. At $100/kg the Tesla
uses $480 worth of cobalt. Two years ago at $25/kg it used $120 worth of
cobalt. So $360 or 1.2% more for a $30,000 car.

This is important to a some people at Tesla who will try to reduce cobalt
usage, to battery recyclers, and to cobalt mine owners. It is only interesting
to everyone else (us).

This is not China winning or beating the US or anything like that. China has
pricey cobalt too. And the best way to minimize the effect of very minor
supply disruptions like this is more free trade so that when the price goes up
someone opens a mine in Australia and it can be bought there. The historic
shortages mentioned in these comments were in the era of protectionism. That
is why economists are afraid of Trump's trade war ideas, these little problems
will add up and cost the US in higher prices.

[1]
[https://www.bloomberg.com/gadfly/articles/2017-09-28/cobalt-...](https://www.bloomberg.com/gadfly/articles/2017-09-28/cobalt-
s-chemistry-experiment)

------
the_trapper
I'm afraid we are just beginning to learn how badly we have arrogantly
underestimated China.

~~~
adventured
I believe we're all actually very deep into realizing the problem, across
North America-Europe-Asia. The context now is what to do about China's
economic protectionism and their refusal after two decades of false pledges to
actually do what they said they would to gain admittance into the WTO.

France for example is trying to get everyone to focus on banding up against
China's dumping practices (the US should be working with the EU on this, Trump
is half going about the trade war wrong of course). Germany & others are
looking at rejecting the aggressive technology transfers / acquisitions that
China is making or trying to make.

India is into overdrive about China's military plans across the Indian Ocean
and greater region.

China's neighbors have been sweating for years about what's coming next out of
them militarily, beyond their territory acquisitions in the South China Sea.

The US has entirely frozen China's ability to buy US companies and is
reciprocating on behavior by increasingly locking out several of China's big
companies.

~~~
galieos_ghost
Trump tariffed the EU and Canada because they allow China to buy companies in
their countries to avoid direct tariffs from the US. It wouldn't have been
necessary if our 'allies' valued our relationship more than making billions
from the Chinese in exchange for stabbing us in the back.

------
dredmorbius
There's a fascinating, if little-known term, the "Harbord List".

Better known via a successor concept, the Strategic Minerals Reserve, now DLA
Strategic Materials. Which serves _both_ military _and commercial_ interests.

[https://books.google.com/books?id=oy4rAAAAYAAJ&pg=PA10&lpg=P...](https://books.google.com/books?id=oy4rAAAAYAAJ&pg=PA10&lpg=PA10&dq="harbord+list"&source=bl&ots=5TOUbFEjd0&sig=LJF0SfMWqgsWv3AbHv5H0x-I658&hl=en&sa=X&ved=2ahUKEwiy7qG3wo3aAhVl9IMKHe0xB0gQ6AEwAXoECAYQAQ#v=onepage&q=%22harbord%20list%22&f=false)

[https://books.google.com/books?id=OqNawWS7iHsC&pg=PA221&lpg=...](https://books.google.com/books?id=OqNawWS7iHsC&pg=PA221&lpg=PA221&dq="harbord+list"&source=bl&ots=IUUj3jYWDU&sig=I3m-Oty9HAQEquZCJ9T8uqlR1sE&hl=en&sa=X&ved=2ahUKEwiy7qG3wo3aAhVl9IMKHe0xB0gQ6AEwAHoECAcQAQ#v=onepage&q=%22harbord%20list%22&f=false)

[https://www.globalsecurity.org/military/agency/dod/dnsc.htm](https://www.globalsecurity.org/military/agency/dod/dnsc.htm)

------
classicsnoot
I have rewritten, in my head, the comment I am about to make 2 or 3 times, and
it kept getting more obfuscated by me trying to portray it in a way that gets
me an answer and not get my karma obliterated. So I will just go with the
blurt method:

Was Trump right about China? Additionally, was it a mistake to be so helpful
to the Chinese 1970s- now?

~~~
baybal2
>was it a mistake to be so helpful to the Chinese 1970s- now?

Yes

Mr. Kissinger and Mr. Nixon misunderstood crucial things about China.

Sino-Soviet split was not such. Rather than an imagined existential struggle,
it is better to say it was a family squabble; like newlyweds trying to figure
out who is a top dog in a family. Rather than splitting the Eastern Bloc, they
just gave Chinese a much bigger advantage in negotiations with Soviets. A
proof of that is USSR giving Chinese not something, but a _NUKE_ , a jet
engine tech, tanks, AA and ground to air missiles (!), and truckloads of
resources looong into the split.

Mr. Nixon and Mr. Kissinger were tricked by Chinese.

If you doubt so, read excepts from Kissinger's biography about his thoughts at
the moment of US-Mao deal. He was completely oblivious of all aforementioned.

~~~
seanmcdirmid
The sino Soviet split was real, and could have easily escalated into a
shooting war (and actually was one in Vietnam by proxy) beyond a few border
scruffles. China making overtures to the USA was a matter of survival to them
as they thought at the time.

~~~
classicsnoot
FWIW they totally duked it out in the Northern/Mongolian region. But they kept
it quiet so we all forget. China also pushed heavily into India during the
Cuban Missile Crisis.

------
exabrial
We should probably exploit local resources, anyway. Mines in some Asian and
third world countries have terrible human rights records.

~~~
RobertRoberts
The US had horrible human rights records in the early 1900s, but this was
fixed with prosperity and a population that demanded their government protect
them.

Rights the US should be helping to motivate other countries to employ, not
playing grab-ass with China over property rights and resources.

~~~
wil421
Comparing something that happened 100 years ago is not an equal comparison.
The reason we have changed since the 1900s is because of horrible working
conditions. The US also significantly changed in the 1970s in regards to
pollution, Ohio river fire[1].

The point is we can’t allow someone to make questionable choices just because
we did it 100 years ago. Especially when it’s changing the environment, it’s
up to Western companies and China to make a change.

[1][https://en.m.wikipedia.org/wiki/Cuyahoga_River](https://en.m.wikipedia.org/wiki/Cuyahoga_River)

~~~
RobertRoberts
> _...we can’t allow someone to make questionable choices just because we did
> it 100 years ago._

I didn't even remotely suggest that, I said the opposite. That the real
solution is to get the countries on their feet so they can run things
themselves, be their own people and control their own resources. Then they can
control their pollution and human rights.

Until a country can stand on it's own two feet, it will be a pawn between
global power brokers.

------
gonvaled
What a load of rubbish I see in the comments. The US has been using all the
tricks in the book, for decades, to further its economic dominance, including
shaping international law in its own interest (copyright & IP law) and other
niceties like invading countries, corrupting democracies, supporting
dictators, and lying in the security council. All while polluting and laying
to waste the planet.

And now you are complaining because China is, adhering to international
trading agreements, improving the quality of living of their citizens, and
winning in some areas? Whiners! What a fitting president you have ...

It would be good for you to realize that the planet is not only populated by
americans, that other people have the same right as you have to improve their
quality of life, and that you do not have any divine entitlement to affluence.

~~~
tdb7893
I think most of the issue is that they were let into international trade
markets on the assumption that it would be a free market but they have stolen
a lot of IP and not been a particularly open or free market in some areas. I
hope the international community calls out the US on a lot of toxic practices
but doesn't mean we need to ignore the poor Chinese trade practices

~~~
gonvaled
Have you even, for a fraction of a second, considered what it meant, for
example, to invade Irak and kill thousands / millions of civilians, while
destabilizing one of the most dangerous areas of the planet?

And you are worried that, in a playing field tilted by and towards the US,
China has found a way, maybe playing the system, to improve their economic
well-being? I for one hope that they keep on finding ways to force the system
to "trickle down", as your right-wing capitalists like to describe your
dysfunctional one-percenter system.

According to you, now is the time to call the unfair Chinese trade practices,
and yes, you know, we will even maybe take a look at what the US has been
doing for decades, yes maybe we will take a look now, but of course the
important thing is to make sure that the Chinese do not play the system to
their advantage. Once we make sure, then we can forget about the wrongdoings
of the US. After all, the US are the good ones, so who cares if you kill one
million here, one million there. It is for the greater good.

Rubbish.

~~~
tdb7893
I'm all for equal enforcement of trade issues so I'm not really sure who you
are arguing against here. It's also a good time to call the US out on their
problems.

------
ksk
Which country _doesn 't_ want to corner supply markets? How is this different
from if any other country would have done it?

~~~
RobertRoberts
The difference is that other countries don't combine their businesses with
their government, thus creating an unholy alliance where the government can
manipulate the value of their currency and empower their businesses to out
compete on the global markets unfairly.

~~~
ksk
>The difference is that other countries don't combine their businesses with
their government,

The US government has export embargoes, and has blocked the foreign purchase
of US tech firms, citing "national security". The NSA has used US tech firms
to spy on foreign citizens/governments.

>where the government can manipulate the value of their currency and empower
their businesses to out compete on the global markets unfairly.

Every government tries to make exports cheaper. How many billions of dollars
has the US treasury printed during quantitative easing? Also, for e.g., the US
defense only accepts payment in USD for weapons purchases or defense services
(to korea, japan, etc) - in part - helping keep the demand for the USD high.
Calling it currency manipulation doesn't make it evil when China does it. Its
just a game that all countries play and each tries to brush their own
motivations under carpets with different words written on top.

To me, while it's not a wash, with every country being "equally bad", its a
little hypocritical to see countries adopt a "do as i say, not as I did"
policy.

~~~
mrkstu
What I think is happening is people are identifying machiavellian actions.
Chinese actions aren't 'bad' per se- they are self-interested though- and
often in a zero-sum context.

The US, despite many deplorable actions by its government over the years,
consistently also supported good government initiatives, development
initiatives, and generally bi-lateral open markets.

This has allowed well run countries access to a large export base with minimal
barriers- hence the rise of countries like S. Korea, Japan, China, Taiwan and
Germany post WWII, all of which could have been foreclosed by the hyperpower
of the US if it so wished.

China is completely strategic in leveraging its money and industrial base into
more military and political power. It has no problem in leveraging corrupt
governments like Venezuela to secure more strategic influence, much like the
US did during the Cold War, which at least had the goal and virtue of halting
the spread of totalitarian Communism.

If a nation is going to act completely self-interested, rather than contribute
to the greater good and trust that growing the market ensures more for
everyone, it then behooves other countries to act in defense of their self
interest in return and potentially act in a coordinated manner to constrain
that power.

The US, despite its errors, delivers value to its partners. S. Korea, Japan,
Germany have all directly benefitted from sheltering in the embrace of
American military might. And as the Philippines has shown, the US is more than
willing to withdraw from any country (other than Cuba, for historic reasons)
that wants it gone.

~~~
ksk
Thanks for the comment. I agree with some of what you said. My objection is
towards the recent (mostly in the west) hyper nationalistic attitude towards
China, as-if everything they do is necessarily evil. Personally, I have no dog
in this fight as being neither American nor Chinese (not that it should matter
anyway :) ).

I'd like to counter some of your points though. I don't think the US could
have checked the rise of all of those countries. The US (Allies) forced their
way economically into Japan/Germany/Korea/etc after the war, in an act of pure
self-interest - Reparations, forced exports, etc. They continued to benefit
from the rise of those countries anyway.

China is strategic as you say, but they've always been isolated from the West.
They've tried creating alliances (BRIC), which have been moderately
successful. Now they're also trading with many heretofore neglected countries
in Africa to the tune of hundreds of billions of dollars. Western media calls
it "the new colonialism". I happen to think that this is the west realizing
that there is a chance, however slight, that they could be excluded from a
large portion of the future growth markets. Maybe an emergence of the Silk
Road?
[https://en.wikipedia.org/wiki/Silk_Road](https://en.wikipedia.org/wiki/Silk_Road)

