While “Ag Metal Miner” takes note of another problem I’ve been pointing out for some time in a post at OilPrice:
One of the main factors hamstringing global auto supply is the ongoing semiconductor shortage. Unfortunately, hopes of seeing any relief in this area were dashed yet again at the World Economic Forum this Spring. There, Intel CEO Pat Gelsinger stated that supply problems would most likely continue into at least 2023. He subsequently admitted that 2024 would be more likely.
As with most other commodities, the shortage of microchips is a multifaceted problem. During the pandemic, home electronic sales went through the roof. However, factories were also forced to slow production or shut down entirely. As the Law of Supply and Demand reared its familiar head, it wasn’t long before shortages, and price increases became the norm.
Then came the invasion of Ukraine. This drastically affected the supply of neon gas, which is essential to the conductor market. Russia, on the other hand, supplies between 25% and 30% of palladium, another semiconductor necessity. As sanctions on the country began to roll out, the palladium did the opposite.
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By and large we don’t produce either those consumer electronics or the semiconductors necessary to make them here. Most are imported from China, Taiwan, Japan, and South Korea. It’s not just semiconductors and neon that are in short supply:
The takeaway: more and more people want off gasoline. And whether they go into the future happily or begrudgingly, they are going nonetheless. This means a lot for metals commodities, especially battery-related minerals like lithium, cobalt, and nickel. It means a lot for battery companies, who are pressured by the market to produce newer, better, and more effective products.
The top producers of lithium are (in descending order): Australia, Chile, China, and Argentina. The top producers of cobalt are: Democratic Republic of Congo, Russia, Australia, Philippines, Cuba, and Canada with DRC producing more than all other producers combined. We have substantial known reserves of lithium here and know how to produce it from seawater. We just choose not to. Cobalt’s another story. DRC and Russia have been the major sources for decades.
You have been pointing it out for years. I have been pointing it out for years. In fact, I’ve lived it for years.
The causes are simple: environmental policy, political desperation to keep prices down on goods purchased by American consumers losing purchasing power, large corporate capture of politicians, and consumers who lie through their teeth about desiring to buy American vs on price.
But look, there are two sides to a story. Let’s take me as an example. I haven’t bought an auto that was not a Porsche in 20 years. My wife tends to BMW and Audi. Why? Because they are superior products and I can afford it. (Notice: no Italian cars; Ferrari or Lambos)
It need not be this way. There is now one American car that is right there with Porsche, Ferrari, Lambo, etc in really, really good – supercar – status. Any car people here already know the name before I write. The new Chevy Corvettes. I just traded my 911 (I’m one of those guys who trade every 2-3 years) for a Panamera. But the Vette was very intriguing. In the end, in concessions to advancing age, I went with the ultra luxury 4 door sedan instead of the need for speed. Pretty much a 4 door 911.
This country needs to get its head screwed on straight. Build it right here. Build what is strategically necessary here. Buy it here. Forget all this anti-capitalist enviro crap. (Germany and your current predicament? Fuck you.) It will take 10 years to get to equilibrium. Every day with Joe Biden is a lost day.