Commodity Online:

(snip)

Now long-range planning is not something that we in the West are accustomed to. We’re always just thinking of the economics of profitability in the short term. So the rest of the world is being caught off guard as China sneaks around the world and buys up these assets. And the critical ones are not nickel and zinc and copper, the traditional base metals. There are a lot of those deposits around the world, and if the price is high enough, they can be put into production and everybody will have whatever copper they need. It’s the more obscure metals—what I call infrastructure support metals—like molybdenum, the rare earth oxides, lithium, tungsten and tantalum. They represent just an incremental cost of the total end product.

Uranium is a classic example. The uranium fuel represents just 3% of the cost of producing nuclear energy. These things are essential. You cannot have the larger product without them. In the case of rare earth oxides, we’re looking at a situation where the Obama Administration would like to see clean energy replace gasoline-based energy in transportation fuel. The Chinese are thinking along similar lines because they don’t want to be dependent on foreign oil supplies any more than the United States does. Rare earth oxides go into these super magnets that are a key part of these hybrid and electric cars.

My comment: I have been talking about China and its long term strategic thinking and planning for a couple of years now. The acquisition of raw materials around the world by China to ensure their economic growth is just one example. As the US continues to make classic economic mistakes and blunders the Chinese and other Asian countries are making decisions that will ensure growth and future economic dominance. If you are not looking at Asia as the new center of wealth creation what is it you don’t get?

John Polomny
The Real Deal