It’s possible that I shall make an ass of myself. But in that case one can always get out of it with a little dialectic. I have, of course, so worded my proposition as to be right either way (K.Marx, Letter to F.Engels on the Indian Mutiny)
Japan Investment Corp., a government-backed group, has agreed to buy Tokyo-listed chipmaking materials provider JSR for $6.3 billion.
Why it matters: This is part of a global trend of governments seeking to safeguard their semiconductor supply chains.
By the numbers: Japan Investment Corp. will offer around $30.40 per JSR share via a tender, representing a 35% premium to Friday's closing price.
JSR has around a 30% global market share share for photoresists, light-sensitive polymers that are used as coatings on semiconductor substrates.
More,per Bloomberg:"Those compounds are needed to make semiconductors used in supercomputers, AI-harnessing data centers and missile control systems, not to mention gadgets including iPhones. Government control over the materials critical to powerful chips would grant Japan greater leverage in a world increasingly divided by an escalating US-China technological rift."
Friday, January 14, 2022
THE NEW COLD WAR
Whoever controls the spice, controls the universe
From missile guidance systems to electric car batteries, China’s domination of rare earths has global implications. A worker at Xinwangda Electric Vehicle Battery Co Ltd, which
makes lithium batteries, Nanjing, China, March 2021
SAFE BECAUSE THEY ARE UNPLUGGED
(STR/AFP via Getty) Published 14 Jan 2022
MONOPOLY CAPITALI$M WHINES ABOUT MONOPOLY STATE CAPITALI$M
In the science-fiction classic Dune, the natural resource of “spice” represents the most valuable commodity in the universe, found only on the desert planet of Arrakis. Spice serves various purposes in Dune, but in both movie adaptations of the novel, Baron Harkonnen, former ruler of Arrakis, summarises its importance with the line: “He who controls the spice, controls the universe.”
While Dune has its share of spice, Earth contains its own spice rack, stocked with resources and commodities offering opportunities for those who control them and threats for those who do not. One state that has perhaps taken the words of Baron Harkonnen as encouragement in its resource strategy is China.
Beijing has implemented a long-term strategic plan for maximising the nation’s control over exploration, production, pricing and exports of natural resources that began with the creation of its first Five-Year Plan in 1953 and has allowed the state to “win without fighting”. This strategy still guides Chinese actions in regard to exploiting natural resources, one example being the acquisition of rare earth elements in regions around the world.
Latest figures show the United States relies on China for at least 80 per cent of its rare earths.
China is estimated to mine more than 70 per cent of the world’s rare earths, and is responsible for over 90 per cent of its refining and production. These elements are essential components in myriad forms of technology, including military equipment such as jet engines, missile guidance systems, anti-missile defence systems and satellites. Latest figures show the United States relies on China for at least 80 per cent of its rare earths, with China supplying 81 per cent of the world with its rare earth elements in 2017. China further holds a dominant position in supplying the United States with 21 of the 35 mineral commodities that Washington deems critical for its national security and economy. The United States is still attempting to extricate itself from this dependence on Beijing for critical commodities, a reliance that has led to vulnerabilities for the country and others in the past.
In 2010, Beijing halted rare earth exports to Japan for two months in response to Tokyo’s detainment of a Chinese fishing captain found near disputed East China Sea Islands. In 2021, China suggested halting exports to the United States as a test of how the country would produce fighter jets without rare earth supply and where the supply chain may shift as a result. Australia is relatively insulated from rare earth coercion, holding the sixth-largest reserves of rare earths in the world, much of which is untapped. That doesn’t mean that Australia’s military can’t be affected by poor quality Chinese metal or its reliance on other Beijing resources, such as the 2021 shortage of urea, another form of spice and an ingredient in the fluid needed by diesel trucks and agricultural machines.
China also has a history of creative forms of coercion, such as cutting tourism to certain countries, weaponising trade tariffs, and even halting trash processing. Attempts to diversify supply chains have run into further obstacles. Africa represents an opportunity for the supply of rare earth metals, but Beijing has already multiplied mining investment by Chinese entities on the continent 25 times in the period 2005–15. Much of this access to resources is tied to investment in infrastructure, which in turn links up with China’s ambitious Belt and Road Initiative. A Chinese firm has a 51 per cent stake in the world’s largest lithium mine in Australia, which is all on top of China’s own large lithium reserves.
As the world moves towards generating sources of renewable energy and combatting climate change, Beijing is one step ahead. In the Democratic Republic of Congo, China has gained access to the largest untapped reserves of the key metal cobalt, an essential component in electric car batteries. Chinese companies have taken ownership of eight of the 14 largest cobalt mines in the country. Similar moves have been made in South America in an area known as the “Lithium Triangle”. The region rests on the borders of three countries into which Beijing has invested billions for the rights to mine lithium: Chile, Argentina and Bolivia, a nation described as the “new Saudi Arabia” for its potential in this component of electric car batteries.
Afghanistan offers a similar treasure trove of lithium, with Chinese firms seeking to take advantage of what may be the world’s largest lithium reserves worth an estimated $1 trillion or more. A Chinese firm has a 51 per cent stake in the world’s largest lithium mine in Australia, which is all on top of China’s own large lithium reserves. This domination of resources has come at the cost of the health of local workers, communities and environments around which their mining operations take place, as well as accusations of widespread graft.
Dependence on supply chains with Beijing at the on/off switch is a dangerous position and one that nations will need to adapt to in order to avoid the vulnerability of coercion. China has put itself ahead of the game in a natural resource strategy that brings to mind words from another classic of science fiction: “intellects vast and cool and unsympathetic, regarded this earth with envious eyes, and slowly and surely drew their plans against us.”RACIST JINGOISM
Bogdanov’s Mars is an opportunity to create an outside from which to examine the givens that are taken for granted on Earth. On Earth, on the other hand, the division of the whole planet into component parts created an initial blissful ignorance; individual cultures could live without concern for one another.
Saturday, May 28, 2022
LEAVE IT TO THE MARKET
Bubs Australia to ship at least 1.25 million baby formula cans to US
US Department of Health and Human Services allowed global farm commodities trader Cargill Inc to provide raw materials needed to maximize the production of infant formula by invoking the Defence Production Act.
Bubs Australia Ltd plans to ship at least 1.25 million cans of its baby formula to the US to help ease a nationwide shortage, the US Food and Drug Administration (FDA) said on Friday.
Some of it is currently in stock for transport and more will be produced by the Australian company in the coming weeks and months, according to the FDA. MONOPOLY CAPITALI$M Meanwhile, the US department of health and Human Services allowed global farm commodities trader Cargill Inc to provide raw materials needed to maximise the production of infant formula by invoking the Defence Production Act. Cargill supplies dozens of products to infant formula makers and the move will allow the manufacturers to produce at full capacity to address the “urgent marketplace shortages”, the department said in a statement.
The Biden administration had earlier decided to urgently meet the nationwide shortage by importing emergency supplies from Europe, the first of which arrived earlier this week. THE ANARCHY OF CAPITALI$M
Bubs' supply is another import allowed by the FDA as part of its regulatory flexibility started earlier this month to mitigate one of the biggest baby formula shortages in recent history.
The shortage is partly due to Abbott Laboratories' manufacturing plant in Michigan recalling some products including Similac in February.
Abbott said on Tuesday it plans to restart production at the facility on June 4, adding it would prioritise making EleCare and supplying it on or about June 20.
EV sales in China are soaring as domestic manufacturers aggressively cut prices.
In China alone, EV sales are set to jump to about 10 million this year, accounting for about 45% of all car sales in the country.
To compare, the U.S. will see roughly one in nine cars sold in 2024 to be electric.
While U.S. and European automakers struggle with weaker demand for electric vehicles, China is churning out a growing number of small and cheap EVs that are taking over the domestic car market and other markets in Asia.
Affordability has been a key driver of consumer choices when buying a car. The average consumer in the U.S. and Europe has yet to afford an EV manufactured by a Western carmaker. That's not the case in China, where generous government subsidies have helped EV manufacturers make many models priced on par or even lower than gasoline cars of the same class.
EV sales in China are soaring as domestic manufacturers aggressively cut prices, undercutting Tesla and the legacy manufacturers.
The Chinese strategy is a winner in Southeast Asia, where demand for electric small city cars and two- and three-wheelers is set to grow exponentially in the coming years.
In China alone, EV sales are set to jump to about 10 million this year, accounting for about 45% of all car sales in the country, the International Energy Agency (IEA) said in its Global EV Outlook 2024 report this week.
To compare, the U.S. will see roughly one in nine cars sold in 2024 to be electric, while in Europe, electric cars are still set to represent about one in four cars sold despite a generally weak outlook for passenger car sales and the phase-out of subsidies in some countries, noted the agency advocating for a fast transition to EVs and clean energy.
This year's EV outlook by the IEA stresses the most important factor for the rapid uptake of electric cars—affordability.
"The pace of the transition to electric vehicles hinges on their affordability," the agency says.
China is already winning in affordability, leaving Western carmakers, including Tesla, struggling to balance price cuts with heavily eroded profit margins.
The IEA has estimated that more than 60% of electric cars sold in China in 2023 were already cheaper than their average combustion engine equivalent. However, EVs sold in Europe and the U.S. remain between 10% to 50% more expensive than their combustion-engine equivalents, depending on the country and car segment.
Moreover, two-thirds of all available EV models globally last year were mostly the more expensive SUVs, large cars, and pick-up trucks, the agency noted.
"In 2023, 55% to 95% of the electric car sales across major emerging and developing economies were large models that are unaffordable for the average consumer, hindering mass-market uptake," the IEA said.
But Chinese carmakers expanding overseas have been offering since 2022 smaller and much more affordable models that "have quickly become bestsellers," the agency added.
Chinese manufacturers have an advantage in conquering smaller markets in Asia, such as Vietnam and Thailand, where EV sales picked up last year.
Europe and the U.S. are unhappy with the Chinese competition in the EV sector, which enjoys generous support from China's authorities.
The Chinese government has granted direct subsidies of at least $3.7 billion (3.4 billion euros) to EV manufacturer BYD, which has been one of the main beneficiaries of China's massive subsidies for green technologies, a German think tank that advises the government said in a report earlier this month.
"China's subsidy policy has been a controversial issue for years: European industries often struggle to compete with Chinese counterparts on price," said Dirk Dohse, Research Director at the Kiel Institute and co-author of the report
The EU and European carmakers are already spooked by Chinese EV manufacturers' plans to boost sales in the EU.
The EU launched in October anti-subsidy investigations into EU imports of EVs from China to determine whether the value chains in China benefit from illegal subsidization and "whether this subsidization causes or threatens to cause economic injury to EU BEV producers."
The findings of the investigation will establish whether it is in the EU's interest to impose anti-subsidy duties on EV imports from China, the European Commission said at the time. The EU probe into the Chinese subsidies is ongoing and set to conclude by November, but the bloc could impose tariffs as early as July.
By Tsvetana Paraskova for Oilprice.com
Monday, January 09, 2023
STATE CAPITALI$M VS.MONOPOLY CAPITALI$M
Xi Warns China Officials to Avoid ‘Collusion’ With Big Business
Mon, January 9, 2023
(Bloomberg) -- Chinese leader Xi Jinping warned officials against colluding with the business world, underscoring that his government’s crackdown on the private sector will remain a concern for investors despite efforts to boost the economy.
“Action should be taken to prevent leading officials from acting for any interest group or power group, and to forestall any collusion between officials and businesspeople,” Xi told a meeting of anti-corruption regulators on Monday, according to the official Xinhua News Agency.
He also warned against “any infiltration of capital into politics that undermines the political ecosystem or the environment for economic development.”
Xi’s government has recently eased up on a regulatory crackdown on tech giants like Alibaba Group Holding Ltd. and Tencent Holdings Ltd., helping their shares rebound. Yet questions remain over how far that approach will go given Xi has also pledged to ensure “common prosperity,” in part by reining in wealthy special interests.
Xi has made reining in graft a central aspect of his leadership of the world’s second-biggest economy over the past decade. That approach has been popular with the public and also served to weed out potential threats to his rule.
Last year, the anti-corruption officials broke up what they called a “political clique” led by former police official Sun Lijun, who was sentenced to what amounts to life in prison for taking bribes and other crimes.
The message that graft cannot be allowed to thrive in the Chinese political system is one that Xi delivers regularly. In December, just after securing a third term in power, Xi said the country had achieved an “overwhelming victory” in its battle against corruption but added that the work was “far from over.”
Economic Measures
Xi’s latest call to continue with the campaign comes as his government abandons its Covid Zero approach toward the coronavirus. On Sunday, China opened borders that had been largely closed for nearly three years, after earlier doing away with quarantine camps, mass testing and snap lockdowns.
Those policies had led to public anger, with widespread protests erupting in late November, though the government has insisted its policy changes were underway before the demonstrations erupted.
With covid rules loosening, the government is stepping up efforts to bolster the economy. China is considering a record quota for local government bonds and widening the budget deficit. The economy is forecast to expand by 4.8% this year, compared with little growth in the US and a potential contraction in the Eurozone, according to data compiled by Bloomberg.
Tuesday, December 27, 2022
STATE CAPITALI$M IS MONOPOLY CAPITALI$M
Tencent billionaire goes on a tirade as cracks appear in empire
Mr Pony Ma’s tirade marked a rare show of frustration for the usually mild-mannered mogul who helped create China’s largest Internet firm away from the spotlight.
DEC 22, 2022,
BEIJING - Many multinational CEOs like to close out the year with a message of congratulations. Tencent Holdings Ltd’s billionaire co-founder Pony Ma delivered a no-holds-barred rant about slacking, oblivious and even corrupt employees.
Mr Ma’s tirade marked a rare show of frustration for the usually mild-mannered mogul who helped create China’s largest Internet firm away from the spotlight.
Last week, the tycoon convened a town-hall meeting to personally deliver a blistering attack against the way staff managed businesses from social media and content to gaming.
The message: with the survival of some businesses in doubt, they all needed to get their act together, according to people who attended the 10-minute lecture.
“You can’t even survive as a business, yet you’re chilling on the weekends, playing ball,” Mr Ma told his audience, according to the people present, who asked not to be identified describing an internal event.
His remarks were first reported by local media outlet Jiemian. Tencent representatives didn’t immediately respond to a request for comment.
Tencent, which with Alibaba Group Holding Ltd helped establish the modern Chinese Internet industry, has seen growth evaporate over the past year in the aftermath of a sweeping crackdown on private enterprise.
The company’s gaming business came under attack from regulations intended to curb youth addiction, while an economic slowdown twinned with punishing Covid-19 curbs eroded its advertising segment.
It cut jobs by the thousands this year, shrinking its workforce for the first time in almost a decade.
Mr Ma and his lieutenants have mostly maintained an upbeat tone in public, lauding efforts to clean up Internet content and restructure the gaming industry.
They also expressed hopes that the reforms are mostly completed and that Tencent can get back to quality growth.
But in last week’s internal address, Mr Ma laid into virtually every facet of his US$400 billion (S$539.77 billion) Internet empire.
He upbraided the bread-and-butter gaming division for frittering away money to acquire users for hastily churned-out titles, rather than focusing on quality.
Mr Ma accused employees of “superficial” reforms to spending and costs, according to attendees.
He even said corruption remained rampant across the ranks, without elaborating, the attendees added.
Even the relatively nascent cloud arm was accused of a wasteful market-share grab against Alibaba and Huawei Technologies Co, though Mr Ma acknowledged it corrected course quickly.
But he reserved his harshest comments for Tencent’s ageing social network and content empire, which is losing ground to mobile-native rivals like ByteDance Ltd, the Chinese owner of TikTok.
Tencent’s years-old news service is now finally in the black after some job cuts, but it could very well be culled if results don’t improve, Mr Ma was quoted as saying.
“Could that business get cut? I told the team - possibly,” Mr Ma told employees, according to the people present.
The one silver lining appeared to be WeChat’s short-video feed, Mr Ma said.
Tencent is laser-focused on growing that TikTok-style feature, which has yet to fully monetise content with e-commerce and advertising offerings.
Executives have said advertising revenue generated by the new service should surpass 1 billion yuan (S$193.36 million) in the fourth quarter.
But China’s biggest social media giant must continue to slash costs aggressively in 2023, or managers will do it for them, Mr Ma told the meeting.
“I think this should become a habit,” he emphasised, according to attendees.
BLOOMBERG
Wednesday, August 03, 2022
NOCs, Not Big Oil, Are Responsible For Most Emissions
THE OLD STATE CAPITALI$M VS MONOPOLY CAPITALI$M TROPE
Big Oil has caught a lot of flack for its slow decarbonization efforts, but much of the criticism may be misguided.
Emissions from National Oil Companies far outpace those of Big Oil.
Not only do National Oil Companies emit more, but they also rake in more profit and receive much less attention than their private counterparts.
While much of the global pressure toward decarbonization has been directed toward privately owned and operated oil supermajors like BP, ExxonMobil, and Shell, a new report from the Economist suggests that much of this pressure and blame is misguided. It’s not that Big Oil doesn’t need to change its focus, strategy, and commitments in order to cut greenhouse gas emissions quickly and significantly enough to avoid the worst impacts of climate change – it does. The thing is, the emissions of privately owned oil companies pale in comparison to the enormity of state-owned oil enterprises, which are producing most of the oil, emitting most of the greenhouse gases, raking in most of the profits, and receiving much less attention. In fact, the Economist article, titled “State-run oil giants will make or break the energy transition,” says that in comparison to Big Oil, national oil companies (NOCs) are “enormous oil.” Together, NOCs represent three-fifths of the world’s crude oil production, half of global natural gas production, and two-thirds of the world’s remaining proven oil and gas reserves. “Four—Adnoc of the United Arab Emirates (UAE), Saudi Aramco, pdvsa of Venezuela and QatarEnergy—possess enough hydrocarbons to continue producing at current rates for over four decades.”
Taking into consideration the sheer scale of NOCs’ production power, it does make the global attention to these institutions’ climate actions (or rather non-actions) particularly stark and worrying. Especially when you take a look at just how bad most NOCs’ track records are when it comes to going green. To be clear, Big Oil’s track record isn’t stellar either, especially west of the Atlantic, but the greenhouse gas emissions of most supermajors have already stabilized or peaked. By contrast, just two NOCs can say the same: Brazil’s Petrobras and Colombia’s Ecopetrol.
So why aren’t we going after the big fish? The answer, of course, is complicated. Decarbonization is political no matter how you slice it, but pressuring governments themselves to divest of the very industry keeping their state economies afloat and their politicians in office is tricky and divisive business. Many countries with state-run oil companies are volatile nations with monopolized economies and no contingency plan if oil was to go the way of the dodo. What’s more, all too often, petrostates make for oil autocrats with itchy trigger fingers. “No matter how you define a petrostate – whether you look at a state’s oil-derived wealth, its dependence on oil revenues, or its exports and relative importance to world markets – there is strong evidence that petrostates are more likely than other countries to start wars,” Foreign Policy reported last month.
Not all NOCs are created equal, of course. They are as diverse as the nations that house them. Unsurprisingly, richer countries tend to have better run, more ecologically responsible outfits. They also often happen to have more geologically advantageous oil reserves – part of what made them rich in the first place. By contrast, many poor nations’ NOCs are poorly run, with tendencies toward inefficient and dirty practices. “The Algerian and Venezuelan companies emit three to four times as much carbon in oil production as do the more geologically blessed and better-managed firms such as [the United Arab Emirates’] Adnoc and Saudi Aramco, and flare seven to ten times as much methane, another potent greenhouse gas, per barrel as does QatarEnergy,” the Economist reports.
Ultimately, the “easy” tactics of boycotting, protesting, and naming and shaming that have some impact in the private sphere are effectively toothless strategies when it comes to state-run oil companies. Again, many of the NOCs with the dirtiest operations are operating in some of the world’s poorest countries, and no amount of public pressure will change their economic reality. Ultimately, it comes down to climate finance and holding the world’s richest nations accountable for their pledges to financially support the costly decarbonization efforts of the world’s poorest countries – a promise which has so far proven to be an empty one.
By Haley Zaremba for Oilprice.com
Monday, October 23, 2023
MONOPOLY CAPITALI$M
Transformational Technologies Lead ABS Japan National Committee Meeting
Group photo from the 2023 ABS Japan National Committee Meeting
Maritime industry leaders came together at the annual ABS Japan National Committee Meeting to discuss the latest developments in technology, sustainability, regulations and market trends in the shipping industry.
ABS President and COO John McDonald provided an update on ABS’ industry-leading safety performance and how ABS has secured the number one position in global orderbook share with a fleet that has grown to 285 million gross tons with more than 11,400 assets.
“Collaboration is key to keeping our industry in the forefront of the energy transition, and our committee includes the diverse expertise of many knowledgeable stakeholders, which provides powerful insight to do just that. I am proud of our long-standing relationships and years of experience in Japan and look forward to continuing our work together,” said McDonald.
Committee members were briefed on the latest developments in the dynamic regulatory environment and given a detailed breakdown of the industry’s sustainability challenges and ABS’ services for the industry.
They were given an update on current market trends and transformational technologies such as renewable power sources, carbon capture and pioneering developments in digital class.
Koichi Muto, ABS Japan National Committee Chairman and Corporate Advisor to Mitsui O.S.K. Lines, gave a detailed analysis of the renewable energy landscape for shipping.
He said: “We must think about what renewable energy will look like and what will happen to the power of ships. There are many possibilities for renewable energy. Whatever the cause of global warming, fossil fuels will eventually run out, so we will work to develop new energy sources as soon as possible. From now on, we must think about creating a truly sustainable energy society for eternity.”
The committee meetings are a forum for ABS members, including owners, operators, charterers, and industry representatives from flag Administrations, owner associations, and the shipbuilding and insurance sectors, to come together with ABS leaders and discuss industry issues and developments. These forums are an important part of an ongoing dialogue with the industry to address technical, operational and regulatory challenges.
The products and services herein described in this press release are not endorsed by The Maritime Executive.
CRIMINAL CAPITALI$M
European Commission Seeks to Support Ports in Fight Against Drug Smuggling
Dutch authorities found cocaine hidden in a container of bananas (Openbaar Ministerie file photo)
The European Commission today mapped out an aggressive roadmap of actions designed to step up the fight across member states against drug trafficking, including a strong focus on stopping illegal activities at ports across Europe. In laying out its plan and call for full support from the European Parliament and the Council, the Commission highlights the drug trade as “one of the most significant threats faced by the EU today.”
Today’s action follows a series of previous reports that have highlighted the scope of the drug trade and organized crime ranging from the major shipping carriers to ports across Europe. Europol in May 2023 released a detailed report working with the ports of Antwerp, Hamburg/Bremerhaven, and Rotterdam, looking at the efforts of organized crime. They cited the broad inflation of the ports by organized crime which was using efforts such as stolen identification numbers to gain access to containers that were being used to ferry the narcotics from South America. They found that criminal networks were placing people as employees in ports to gain access to their shipments. Separately, port officials have warned that the drug cartels are expanding efforts into smaller and secondary ports to avoid detection.
Executives from both MSC and Maersk have talked of their extensive efforts aimed at combatting drug smuggling. Last year, several of the major shipping companies and ports announced new partnerships to coordinate their efforts. The Financial Times, however, today in reporting the new EU roadmap quotes a Maersk executive saying the whole supply chain has been infiltrated by drug gangs.
The European Commission cites data from 2021 saying 303 tonnes of cocaine was seized while ports continue to make increasingly large captures. Both Rotterdam and Algeciras recently set records with the Dutch authorities announcing a single seizure of eight tones of cocaine while the Spanish seized 9.5 tonnes.
"Europe has now replaced the U.S. as the single largest cocaine market in the world and is fast becoming a world hub for drug trafficking – a disturbing claim to fame and one we have to redouble efforts to reverse," said Margaritis Schinas, Vice-President for Promoting our European Way of Life. "Today we are announcing a new series of measures to enhance the resilience of logistical hubs and dismantle criminal networks. This will be complemented by strong engagement with partners worldwide to crack down on the main supply routes."
The new roadmap from the European Commission calls for the launch of a new European Ports Alliance. It would specifically seek to reinforce customs authorities and law enforcement as well as the public and private ports to stop the infiltration by criminals. The plan has a total of 17 actions in four priority areas that also include more financial and digital investigations to catch criminal networks, better cooperation between member states, and working with international partners. The Commission commits to implementing its actions in 2023 and 2024.
The Financial Times in reviewing the roadmap says that it calls for allocating €200 million for scanning equipment at the ports. They cite Antwerp as an example saying overall that just two percent of goods are scanned and five percent of the containers identified as “high risk.” Antwerp’s current plans call for scanning all high-risk containers arriving at its terminals by 2028.
Another part of the effort would increase the screening and vetting of port employees. The Commission also plans to commit €20 million to support the Internal Security Fund and efforts to seek proposals to combat organized crime.
