The world where China was an outsourcing solution for all developed economies has come to an end. From the moment we started using state-of-the-art automation technologies and understanding their potential applied to production processes, as Tesla does, for example, labor costs became irrelevant for manufacturing products that meet the needs of developed economies.
So, after having sacrificed two or three generations, what happens now to China, which has enough capital to produce practically anything? The problem China faces in remaining a competitive producer of goods for developed countries is that it cannot enter the United States except by setting up production plants in U.S. territory or equivalent markets. Both the United States and Europe have made it difficult for China to enter their markets. For this reason, Chinese companies have had to take over upstream stages of product manufacturing. In other words, China has had to make a strong entry into the mineral production market and industry, especially, into energy or critical minerals.
At present, China has no problem buying whatever it wants. However, it cannot buy precisely what the world needs, namely, it cannot buy the production processes necessary to develop what the different regions of the world demand. That is why for years they have been working in different jurisdictions to take over the inputs that supply the world's most important industries.
This is what they have been doing with lithium and cobalt, among other strategic minerals for electromobility.
How has this Chinese strategy been conducted, what has the Asian giant been doing? Different Chinese companies bought not only the production plants of these energy minerals, but they are also producing batteries and buying cathode production plants. These measures have had a great impact on the lithium industry, but what about cobalt? Today, China produces and distributes the cobalt needed for batteries that they themselves manufacture, supplying their competitors in battery manufacturing. As if that were not enough, China has also acquired the deposits where this resource is found, most of which are located in the Democratic Republic of Congo.
Today it is no longer imperative to produce where labor is cheapest, because automation has lowered production costs across industries. Regardless of the jurisdiction where the resources needed for production are extracted, it is in each country's interest that the products that satisfy its domestic demand are produced in its territory.
One of the effects of automation is that different countries are beginning to dispense with the outsourcing service previously provided by China.
Then, in the whole electromobility industry, as well as in all the minerals that are used as inputs for this industry, China has made great efforts to take control. Because if you control this industry, you control the future. Whoever has control over the future will, in turn, have mastery over the decision making that shapes the world today.
Therefore, if the contemporary geopolitical game is affected by new automation technologies, as well as by the production and supply capacity of inputs transversally necessary for the upstream production phases of any industry directly or indirectly related to electromobility, what else can we conclude? That the investment capacity and the understanding between the actors involved in the production of energy minerals become a determining factor for the politics and economy of different nations and regions.
From the Book Mining Energy https://miningenergy.blavi.org
