 |
| Photo: Rob Lavinsky, iRocks.com – CC-BY-SA-3.0 |
Reader Alert: This may be the most boring article you've ever read. It's about copper.
According to President Trump, under Section 1, Policy:
Copper is a critical material essential to National Security, economic strength, and industrial resilience of the United States.
The Executive Order goes further by stating that a single producer accounts for over fifty percent of refining capacity in the world, but does not identify the country. We'll clue you in- it's China. So now we will deep dive into the world of Copper, the Threat.
Trump is not wrong about the implications for National Security. We use refined copper/copper end products in electric vehicles and in tons of military equipment. We use refined copper in communication systems. Heck, I bet your computer is using electricity transported on electrical wiring of refined copper. When an old house is foreclosed on, it is not unusual for thieves to break in and strip the house of it's electrical wiring and cut out all the exposed plumbing they can reach. Thieves want the copper.
But the minerals industry has many facets, many hands in the pie, from the mines, the transportation, the refinement, the commodities trading to the shipping and delivery of the refined goods. The copper industry is a reflection of the free market system, sloppy, unreliable, demand driven. and subject to political interference.
United States is blessed with several, large copper mines - mostly in Utah and Arizona. We've got plenty of copper in the ground, and large mining companies to extract it. And that would be awesome news if we had the refining capacity to match. We don't. We're not even close.
In 2024, the United States smelted/refined 865,000 tons of copper. By comparison, the Guixi Plant in China had a total refining capacity in 2024 of 1,100,00 tons smelted/refined. China has 9 of the top 20 plants with over 5,575,000 tons of refined capacity in 2024. The United States refines 15.5% of the copper that China refines in a single year. How did we get to such a disparity?
In the past 5 years, China has invested heavily in building copper smelters/refineries and their market share has increased from 20% to over 50% of the world market. In 2017, the U.S., under some guy named Trump, adopted a policy on surpassing China in refining copper. That policy failed to accomplish any of its goals, with one exception, we are the world leader in recycling copper. We k now how to strip foreclosed homes.
-----------------------------------------------------------------------------------------------------------------------------
Copper, Refined
Because Trump's 2017 policy was not successful, China now has us over the copper barrel. They have leverage and we now face two significant problems:
1. In a time of conflict with China, we could see shortages of refined copper and end products such a car parts and batteries. When a part breaks on a military vehicle, and replacement parts are "in shipment" or not available, we cannot maintain our vehicles and equipment. Our troop readiness is placed at risk.
2. A 25% Trump tariff on copper imports, as proposed, would have an immediate impact on the cost of manufacturing say, a Tesla. Likewise, the countries we export raw copper to, like say, Canada, the number one importer of raw copper from the United States, will retaliate with tariffs on our copper exports, again increasing the costs for transportation, refinement, and end product manufacturing. Higher costs means higher prices and higher prices means inflation and reduced sales. Lower sales means lower earnings, lower profits, lower stock prices, unhappy shareholders and a market downturn. The copper knee bone is connected to the copper thigh bone.
Since we spent three days researching copper with AI Gemini assist, we were able to identify the issue and can propose a way forward to resolve this copper crisis. However, instead of implementing a nuanced and balanced approach to the copper conundrum as we will suggest in a moment, Trump orders a full investigation involving multiple agencies, with nine line items of required investigatory humping across several Federal Departments- some of which Elon Musk recently decimated with dismissals based upon "what have you done this past week?" Who do they expect to perform these studies after laying off thousands of the professionals qualified to research? Someone ask AI Gemini that question.
-----------------------------------------------------------------------------------------------------------------------------
Global leading copper refineries 2024, by capacity
The Guixi refinery, property of Jiangxi Copper Corporation in China,
as of August 2024. The refining capacity of the Guixi refinery amounted to some
1.1 million metric tons of refined product annually at that time. By comparison,
the second and third largest copper refineries in the world were
Shandong Fangyuan Jinchuan Gansu, both with a capacity of 700
thousand metric tons. Almost half of the largest copper refineries worldwide are located in China.
-------------------------------------------------------------------------------------------------------------------------------------
Trump's Executive Order could have been simplified to this: Commerce (dog) meet the ponies (Energy, Defense, Interior). Now please put on a show for us 270 days from February 25th.
The issue is tariffs, China dominance of refining/smelting, and Elon Musk. Trump cannot stab Elon in the back with 25% tariffs on the products Elon needs to build his cars after all Elon has done for Trump with DOGE. But Trump also cannot back down from China, Canada, and Mexico. And we all know Trump when faced with facts that are inconvenient to his fable, doubles down on his decisions. Someone should measure how thin his skin really is.
China claimed dominance over copper in just 5 years. In the United States experts estimate 10-15 years to simply obtain the approvals, then another 3-5 years to build a plant. It can take 20 years in our great nation to build one plant. By then the technology is outdated. We can't get ahead when we walk backwards towards our goal
And now, a proposed solution in a single paragraph:
Waive environmental regulations or expedite reviews. find industrial partners, provide government financial assistance (billions of dollars) to the companies assuming the risk, really educate the public to gain their support, and then build, baby, build. In the meantime. no tariffs on the import of copper and copper-related products.
The only way we regain dominance in the copper market is to build enough plants to refine and smelt the copper we quarry out of our ground. We need to meet domestically the increasing demand for copper products.
We don't need an investigation. We need action.
Find more statistics at Statista
No comments:
Post a Comment