Good piece, Benjamin. Thanks.To your point that current American foreign policy runs counter to what is required, I agree. I doubt many of the 'friendshore nations' are now likely to do raw materials deals with America on any terms other than the most beneficial for them, if at all. Their electorates won't stand for it. I suspect Trump's bullying has ensured "a tech-metal processing alliance with Canada and Australia" won't happen either whilst he is in power other than once again on terms that favor them inordinately. And China's dominance of the rare earth element refining sector means they can manipulate the market to make it impossible for refiners outside China to compete without huge government subsidies. That is, of course, an option.
Or, the US will have fair trade deals going forward, and continue to work with other countries that prize self determination, to crack down on Russia, NK, China, Iran.
It is in the self interest of all countries that are not led by a dictator to cooperate. While it's plain to everyone that Russia, China, NK, and Iran have banded together (despite their clear differences) because they have dictators.
Yeah, the R's said Biden's handlers and Obama/Clinton were acting like dictators. (Obama famously retorted that elections matter.) Yeah, D's reliably insist Trump is a dictator like Bush/Bush and Reagan.
Why was anyone was surprised when UK and China announced they'd move towards fair trade with the USA? Yes, the devil is in the details, but Politicians everywhere (not just the USA) use uncertain times (and all other times) to assert they know what's best.
Today NYT published an article stating the obvious: "Trump often takes maximalist positions in negotiations, only to back down and declare a wind. His opponents are catching on." I defy you to identify any serious negotiator, from Xi, Putin, Kim, and Khamenei to Starmer and Macron who does NOT take maximalist positions, knowing they will back down to make a deal.
I reckon you have no idea about European political culture ? Just take a look at for instance the relations between New Caledonia and France . New Caledonia is a territorial collectivity of France "sui generis" with a special status. It has important reserves of nickel. What do you think would happen if the French government acted like the US administration with regard to Groenland which has nothing to do with the USA ? And no, European leadership culture has nothing to do with US leadership safe for those who imitate Putler and Trumpler. - You have no idea neither how the European Union is working. --- Regarding the China-US commercial "deal", the Chinese fucked the Americans so hard, that even Trump must have felt it. Regarding Russia, Putin is fucking the Americans so hard, that they have no idea where to turn to. --- No European or Western country - Canada at the front - will ever again look the USA as partners. --- And yes : the so-called strong men, bullshitters and assholes, the oligarchs and pantshitters , the criminals and killers like Putler, Trumpler, Xi ... can loose and have already done so.
I'm in Europe (working & traveling) often enough to know European political culture is NOT homogenous. Especially Europe outside EU. It's not just Brexit - Putin, Erdogan, and the Swiss are Europe.
All of which is moot. US and UK already have a way forward, and global companies who (obviously) operate across these areas drive transnational business.
Not sure how to parse your question linking New Caledonia, the French government, Greenland, and the USA. Trump wanted to "stir the pot" regarding Greenland and Canada. He is certainly getting what he wanted.
Have you seen any specifics about the US / China commercial deal? So far, it's just happy talk about a framework. What actual knowledge of this "deal" led to your profane assessment?
US / Canada is well on its way to a new normal.
I believe my comments will age well. We shall see.
Smelting may be the biggest bottleneck to overcome for domestic production in the US. The last primary lead smelter in the US was closed in 2010 of so. Between EPA regulations (for the smelter) and the State of Missouri's environmental health department permitting (transportation of ore from mines to smelter) the costs were too prohibitive to keep it operational. Now the ores are concentrated and shipped overseas for smelting.
At that time the closure was not considered a significant problem as recycling was able to provide 95 percent of annual lead requirements - this has dropped to 62 percent. Even secondary smelters are difficult to operate - a major percentage of used lead acid batteries are shipped overseas for recycling and the lead is then shipped back.
Excessive environmental regulations are a major problem in opening and keeping open smelters and mines. For new operations the process can take a decade or more and be torpedoed in its final stages by environmental groups using the Endangered Species Act.
Currently rather than regulatory reform the options to 'solve' the problem of foreign dependence on critical minerals and components are subsidizing the development of a rare earth mine in Nevada by the DOD and the Chips Act or under Trump - tariffs. These options leave the regulatory burden on the resource extraction and manufacturing intact while adding to the taxpayer/consumer's burden.
P.S. Perhaps not considered as strategic as these other minerals vanadium is still fairly important as an alloy in tool steels and as a catalyst in various industrial processes.
Most (if not all) of these materials were mined and processed in the US. Two related factors caused this to change:
(1) American were understandably upset about damage not just to the environment, but also to the health of the people in the supply chain. Americans implemented regulations across the economy, which some people imagined would lead American companies to produce the same goods without damaging people or the environment. Instead, American firms shut down production, laid off the workers, and auctioned off the equipment / plants (sometimes in bankruptcy) to the countries that were more "permissive" as Benjamin describes.
(2) American labor costs had always been high. Once the supply chain equipment / plants became available at bargain prices, process knowledge spread, and many more countries became open to participating in the global supply chain. (for example, Stalin and Mao would never have allowed that.) Continuously improving logistics were self reinforcing. All of this meant many low-cost, low-regulation countries could now undercut production costs in the US and other "wealthy" countries and participate in the global supply chain.
Were we having a conversation in person or on a live chat I would take the time to ask your background and knowledge of the subject under discussion before proceeding, however rather than potentially drag this out for days, I will just reply to your points with a minimum of examples.
1. Federalization of workplace health and safety occurred in the 70s. With that came bureaucracies to run the agencies set up to monitor them. Readers of Kafka will know what happens when bureaucracies are put in charge of anything - ever expanding regulations and expansion of the bureaucracies to see them enforced.
Same with environmental oversight - with the added push of improvements in technology allowing for the detection of ever smaller traces of elements and molecular compounds in the environment. With that came a mindset that looked at at everything in the environment as a potential health threat and therefore needing to be regulated.
Just a few yeas ago the EPA started the process to have dairy milk classed as a 'hazardous material' requiring all of the special handling in transport and cleanup that are required for any other material in that classification. Particulates were determined to be another health threat - the proposed standards were lower than the naturally occurring levels in many states in the Western United States and would have banned nearly any human activity in those states that created particulates.
2. American labor is indeed not cheap. But then the productivity (ar least in mining and much manufacturing) is correspondingly high. Some of that comes from the fact that with higher labor costs there is more incentive for companies to invest in the machinery to enhance worker productivity - something that the low wage countries are unable to do. As one example, over 50 years ago I worked in a uranium mine in Colorado. In a discussion on productivity and labor costs with one of the mine engineers - a refugee from Cambodia who had spent time in South Africa before making it to the US - I spoke of the massive difference in pay between American and South African miners. He replied that while there was indeed a major disparity in wages that it took 5-6 of the South African miners to do the same amount of work as the American. More recently I worked with a man who had gone to school with my younger brother who had spent most of his mining career working for mining contractors oversees - his skill set was not available in the workforces in the countries he contracted in. And he made very good money.
With several decades of experience in dealing with those health, safety, and environmental agencies while working in mining and construction I could cite pages of examples.
I also have a brother who was the Site Radiation Officer at a working uranium mine with a water treatment plant to treat the mine discharge water. Only an associates in environmental science, but always working to keep up on the latest tech and regs. After the mine shut down he obtained Class A licenses in Ware, Wastewater, and Industrial Water Treatment form the Colorado Department of Public Health and Environment. He currently is the operator in charge of the local water treatment plant.
For giggles that brings up one more example of laws designed to 'protect' public and workers health and safety - recently there was a break in the distribution line from the water plant. he plant is several miles out of town surrounded by farmland. The line from the plant happened to break where it crossed through a field not far south of the plant. The farm is owned by a man who grew up on the farm and actually played in the trench as a child when the line was first installed. Colorado has a law that before any significant excavation can take place a locator has to be called to verify that there are no other buried utilities that will be damaged during the excavation - gas pipelines, electrical lines, etc. causing addition problems and potentially killing or injuring the workmen. Based on having lived on the farm since he was a child the landowner klnew there were no other utilities in the field, but the repair had to wait for a couple of hours for a locator to be called out and 'verify' that fact. As the break was found late int eh afternoon this ended up delaying the repair until the following day leaving town residents without water.
Too much info and I failed to use the actual studies on the cost of regulation and the poor or even non-existent science they are often based on...
Yeah, it can be hard to assess credibility on social media, but it's not simple IRL either. IRL has plenty of know nothings who dismiss sound judgment when they don't like the findings. OTOH, plenty of people rely TOO much on paper credentials. When I "benefit" from that I try to redirect the unearned credibility towards people with deep knowledge of the subject.
But, this is constant on social media.
Your (1) provides excellent examples for the point I wanted to make.
Thank you also for point (2). I had noted American "rare earth" technology and equipment was shipped to China to jump start their industry. You provide great mining industry scenarios where those with expertise and knowledge earn greater wages, and there is an incentive to displace direct labor with new techniques and automation, which are forms of indirect labor. I've seen that in other industries and locations.
Thanks Ben. I hope Americans recover a sense of urgency to put these recommendations into practice. Maybe the Trump shock tactic with tariffs will help, maybe make things worse. Like he says, "we'll see". When has reindustrialization, other than rebuilding after war, ever been attempted before in such a regulated, bureaucratized state like the USA?
Benjamin, what do you think of US efforts (probably also other countries) to extract rare earths from unconventional sources like toxic waste streams / dumps (e.g. the Berkeley pit) and recycling disk drives and other electronics? NYT and other news sources report these sources are now being now be tapped in ways that can be economic and might help reduce toxicity.
Well, Trump has found the solution: Annex these territories -> problem solved!
/sarcasm
Good piece, Benjamin. Thanks.To your point that current American foreign policy runs counter to what is required, I agree. I doubt many of the 'friendshore nations' are now likely to do raw materials deals with America on any terms other than the most beneficial for them, if at all. Their electorates won't stand for it. I suspect Trump's bullying has ensured "a tech-metal processing alliance with Canada and Australia" won't happen either whilst he is in power other than once again on terms that favor them inordinately. And China's dominance of the rare earth element refining sector means they can manipulate the market to make it impossible for refiners outside China to compete without huge government subsidies. That is, of course, an option.
Or, the US will have fair trade deals going forward, and continue to work with other countries that prize self determination, to crack down on Russia, NK, China, Iran.
It is in the self interest of all countries that are not led by a dictator to cooperate. While it's plain to everyone that Russia, China, NK, and Iran have banded together (despite their clear differences) because they have dictators.
Yeah, the R's said Biden's handlers and Obama/Clinton were acting like dictators. (Obama famously retorted that elections matter.) Yeah, D's reliably insist Trump is a dictator like Bush/Bush and Reagan.
Why was anyone was surprised when UK and China announced they'd move towards fair trade with the USA? Yes, the devil is in the details, but Politicians everywhere (not just the USA) use uncertain times (and all other times) to assert they know what's best.
Today NYT published an article stating the obvious: "Trump often takes maximalist positions in negotiations, only to back down and declare a wind. His opponents are catching on." I defy you to identify any serious negotiator, from Xi, Putin, Kim, and Khamenei to Starmer and Macron who does NOT take maximalist positions, knowing they will back down to make a deal.
I reckon you have no idea about European political culture ? Just take a look at for instance the relations between New Caledonia and France . New Caledonia is a territorial collectivity of France "sui generis" with a special status. It has important reserves of nickel. What do you think would happen if the French government acted like the US administration with regard to Groenland which has nothing to do with the USA ? And no, European leadership culture has nothing to do with US leadership safe for those who imitate Putler and Trumpler. - You have no idea neither how the European Union is working. --- Regarding the China-US commercial "deal", the Chinese fucked the Americans so hard, that even Trump must have felt it. Regarding Russia, Putin is fucking the Americans so hard, that they have no idea where to turn to. --- No European or Western country - Canada at the front - will ever again look the USA as partners. --- And yes : the so-called strong men, bullshitters and assholes, the oligarchs and pantshitters , the criminals and killers like Putler, Trumpler, Xi ... can loose and have already done so.
I'm in Europe (working & traveling) often enough to know European political culture is NOT homogenous. Especially Europe outside EU. It's not just Brexit - Putin, Erdogan, and the Swiss are Europe.
All of which is moot. US and UK already have a way forward, and global companies who (obviously) operate across these areas drive transnational business.
Not sure how to parse your question linking New Caledonia, the French government, Greenland, and the USA. Trump wanted to "stir the pot" regarding Greenland and Canada. He is certainly getting what he wanted.
Have you seen any specifics about the US / China commercial deal? So far, it's just happy talk about a framework. What actual knowledge of this "deal" led to your profane assessment?
US / Canada is well on its way to a new normal.
I believe my comments will age well. We shall see.
Smelting may be the biggest bottleneck to overcome for domestic production in the US. The last primary lead smelter in the US was closed in 2010 of so. Between EPA regulations (for the smelter) and the State of Missouri's environmental health department permitting (transportation of ore from mines to smelter) the costs were too prohibitive to keep it operational. Now the ores are concentrated and shipped overseas for smelting.
At that time the closure was not considered a significant problem as recycling was able to provide 95 percent of annual lead requirements - this has dropped to 62 percent. Even secondary smelters are difficult to operate - a major percentage of used lead acid batteries are shipped overseas for recycling and the lead is then shipped back.
Excessive environmental regulations are a major problem in opening and keeping open smelters and mines. For new operations the process can take a decade or more and be torpedoed in its final stages by environmental groups using the Endangered Species Act.
Currently rather than regulatory reform the options to 'solve' the problem of foreign dependence on critical minerals and components are subsidizing the development of a rare earth mine in Nevada by the DOD and the Chips Act or under Trump - tariffs. These options leave the regulatory burden on the resource extraction and manufacturing intact while adding to the taxpayer/consumer's burden.
P.S. Perhaps not considered as strategic as these other minerals vanadium is still fairly important as an alloy in tool steels and as a catalyst in various industrial processes.
Most (if not all) of these materials were mined and processed in the US. Two related factors caused this to change:
(1) American were understandably upset about damage not just to the environment, but also to the health of the people in the supply chain. Americans implemented regulations across the economy, which some people imagined would lead American companies to produce the same goods without damaging people or the environment. Instead, American firms shut down production, laid off the workers, and auctioned off the equipment / plants (sometimes in bankruptcy) to the countries that were more "permissive" as Benjamin describes.
(2) American labor costs had always been high. Once the supply chain equipment / plants became available at bargain prices, process knowledge spread, and many more countries became open to participating in the global supply chain. (for example, Stalin and Mao would never have allowed that.) Continuously improving logistics were self reinforcing. All of this meant many low-cost, low-regulation countries could now undercut production costs in the US and other "wealthy" countries and participate in the global supply chain.
Were we having a conversation in person or on a live chat I would take the time to ask your background and knowledge of the subject under discussion before proceeding, however rather than potentially drag this out for days, I will just reply to your points with a minimum of examples.
1. Federalization of workplace health and safety occurred in the 70s. With that came bureaucracies to run the agencies set up to monitor them. Readers of Kafka will know what happens when bureaucracies are put in charge of anything - ever expanding regulations and expansion of the bureaucracies to see them enforced.
Same with environmental oversight - with the added push of improvements in technology allowing for the detection of ever smaller traces of elements and molecular compounds in the environment. With that came a mindset that looked at at everything in the environment as a potential health threat and therefore needing to be regulated.
Just a few yeas ago the EPA started the process to have dairy milk classed as a 'hazardous material' requiring all of the special handling in transport and cleanup that are required for any other material in that classification. Particulates were determined to be another health threat - the proposed standards were lower than the naturally occurring levels in many states in the Western United States and would have banned nearly any human activity in those states that created particulates.
2. American labor is indeed not cheap. But then the productivity (ar least in mining and much manufacturing) is correspondingly high. Some of that comes from the fact that with higher labor costs there is more incentive for companies to invest in the machinery to enhance worker productivity - something that the low wage countries are unable to do. As one example, over 50 years ago I worked in a uranium mine in Colorado. In a discussion on productivity and labor costs with one of the mine engineers - a refugee from Cambodia who had spent time in South Africa before making it to the US - I spoke of the massive difference in pay between American and South African miners. He replied that while there was indeed a major disparity in wages that it took 5-6 of the South African miners to do the same amount of work as the American. More recently I worked with a man who had gone to school with my younger brother who had spent most of his mining career working for mining contractors oversees - his skill set was not available in the workforces in the countries he contracted in. And he made very good money.
With several decades of experience in dealing with those health, safety, and environmental agencies while working in mining and construction I could cite pages of examples.
I also have a brother who was the Site Radiation Officer at a working uranium mine with a water treatment plant to treat the mine discharge water. Only an associates in environmental science, but always working to keep up on the latest tech and regs. After the mine shut down he obtained Class A licenses in Ware, Wastewater, and Industrial Water Treatment form the Colorado Department of Public Health and Environment. He currently is the operator in charge of the local water treatment plant.
For giggles that brings up one more example of laws designed to 'protect' public and workers health and safety - recently there was a break in the distribution line from the water plant. he plant is several miles out of town surrounded by farmland. The line from the plant happened to break where it crossed through a field not far south of the plant. The farm is owned by a man who grew up on the farm and actually played in the trench as a child when the line was first installed. Colorado has a law that before any significant excavation can take place a locator has to be called to verify that there are no other buried utilities that will be damaged during the excavation - gas pipelines, electrical lines, etc. causing addition problems and potentially killing or injuring the workmen. Based on having lived on the farm since he was a child the landowner klnew there were no other utilities in the field, but the repair had to wait for a couple of hours for a locator to be called out and 'verify' that fact. As the break was found late int eh afternoon this ended up delaying the repair until the following day leaving town residents without water.
Too much info and I failed to use the actual studies on the cost of regulation and the poor or even non-existent science they are often based on...
Yeah, it can be hard to assess credibility on social media, but it's not simple IRL either. IRL has plenty of know nothings who dismiss sound judgment when they don't like the findings. OTOH, plenty of people rely TOO much on paper credentials. When I "benefit" from that I try to redirect the unearned credibility towards people with deep knowledge of the subject.
But, this is constant on social media.
Your (1) provides excellent examples for the point I wanted to make.
Thank you also for point (2). I had noted American "rare earth" technology and equipment was shipped to China to jump start their industry. You provide great mining industry scenarios where those with expertise and knowledge earn greater wages, and there is an incentive to displace direct labor with new techniques and automation, which are forms of indirect labor. I've seen that in other industries and locations.
Thank you for your posts.
Thank you so much. A very interesting text.
Thanks Ben. I hope Americans recover a sense of urgency to put these recommendations into practice. Maybe the Trump shock tactic with tariffs will help, maybe make things worse. Like he says, "we'll see". When has reindustrialization, other than rebuilding after war, ever been attempted before in such a regulated, bureaucratized state like the USA?
Benjamin, what do you think of US efforts (probably also other countries) to extract rare earths from unconventional sources like toxic waste streams / dumps (e.g. the Berkeley pit) and recycling disk drives and other electronics? NYT and other news sources report these sources are now being now be tapped in ways that can be economic and might help reduce toxicity.