We continue digging into the material challenges around the so-called green revolution, and saying the unsayable.
Last week we discussed a climate advocacy research article and study, and we can only hold them to be incompetent in their estimates which are to be expected considering they have no experience in the mineral extraction industry, but that is hardly a crime unless we can prove purposeful incompetence, which is far more nefarious and will take a better investigative journalist than I. Where we left them they were estimating that in copper they would be facing a shortage of about 14% a year where the S&P Global and Codelco mining claims that the level was much greater, as in 5-8x greater in million metric tons (mmt) per year. This creates a huge hole in either the vehicle production market or the build out of the necessary charging infrastructure. This is actually the crux of the main argument that we have had for months here at the CTPC? Who’s gonna buy the bonds? I will bang this drum and bang it and bang it again!!!! Richard Fisher, formally of the Dallas Fed came out this week and asked as only a gentleman of his stature can, “Who is going to buy all that paper, and at what price?” This is going to be paid for by the governments, but we are facing a debt ceiling showdown this summer and we already have $31 trillion and an annual deficit of about $1.5 trillion. Are we going to expect the mining companies to explore, discover, develop, and open these mines when we haven’t opened a major mine in the US in over a decade? Remember, we have to open 1 every year for 29 years and it has to start next year…
That is the copper story, one of hopes and dreams to get to their goal of 1.5 degree Paris accord goal, so the real story becomes how far can they get with the copper that will be available? While I am sitting here on a chimney at least our Green Chimney thinks we can get copper but rare earth materials….
Copper has the best chance of not running out, but let’s next talk about polysilicon.
Chemical and Engineering News has a report that discusses how over 80% of the world’s polysilicon is produced in China with most of it from the Zinjiang region from questionable forced labor sources. Biden has now outlawed polysilicon from unreliable sourced locations which only makes the process of getting polysilicon. Our Green Chimney expects us to need 152% of current production of polysilicon. We are in a trade war with China, who controls 80% of the market, and uses forced labor and the cheapest dirtiest energy possible to produce their polysilicon. It gets more difficult though when you realize that the polysilicon needs to be formed into ingots and China controls over 97% of that production capacity where they mix acceptably sourced polysilicon with forced labor polysilicon in essence “there is no silicon-based solar panel you can buy today that is not suspect.” That’s according to polysilicon consultant Alan Crawford. Lots of polysilicon headwinds here, since in 2021 the US produced just 2.5% of all solar panels globally.
Politico wrote in December the difficulties in achieving these goals as they noted China accounts for 63% of the world’s rare earth mining, 85 percent of rare earth processing, and 92 percent of rare earth magnet production. Our Green Chimney estimated that in order to reach the Paris climate goals there would need to be a 309.4% increase to world production of dysprosium, 271.4% increase in Neodymium, and 372.4% more Tellurium. If they underestimated by a factor of 8 again then the securement of these materials becomes even more challenging, but let’s just look broad picture versus diving into specifics.
The Mountain Pass mine, a lonely outpost in the middle of the California desert has reopened in 2012 despite constant Californication’s efforts to close it down. It is necessary because it is the only mine in the US to mine rare earths and then what do we do with them? We ship them to refiners in China. In fact, Politico writes that when it comes to dysprosium, that is 100% made in China at this time although a factory in the US is in the planning stages. The question remains, why does China control all of this? Politico tells us “U.S. companies struggled to match Beijing’s low costs, which are driven by government subsidies, low worker wages and poor environmental standards. Mountain Pass closed in 2002 after a toxic waste spill and did not reopen for years.”
It is no better when looking at Tellurium, a mineral in which China produces 61% of world production. However, a company in Colorado, First Solar is trying to move some of the global Chinese production into the states. Their president Tyrone Docherty says “There’s going to be a supply crunch, no question about it.” So, if a president of a company that is trying to compete with the Chinese in Tellurium production why is it that our Green Chimney of climate advocates and fake leather climate writers are convinced that they are modern day myth busters. I’ll be happy to tell you, they are blowing smoke up your ass.
But, I will tell you another chimney story. These companies that are starting up at Mountain Pass and in Colorado still need to make a profit and have a working business. These presidents have big plans, but they have got some government funding to go restart or start some of these endeavours, but what happens when the government money dries up? I again posit to you, “Who’s gonna buy the bonds?” How much are these rare earth elements going to costs when mined in America with our environmental laws, our water purity and environmental concerns, and let’s not forget that we have an employment rate that is at 5 decade lows? You think we have a bunch of people that want to move out to the country and get dirty?
We here at CTPC remember our history and the story of Obama’s pride and joy Solyndra, an early maker of solar panels with their loans guaranteed by the US govt. all $535 million dollars of them, that amount seems so quaint by what we are spending now. Chris Gronet was the founder of Solyndra in 2005, which manufactured solar panels and sold them at less than he could manufacture them leading to a $528 million dollar loss for the federal government on that loan program but not before Chris got a severance package of $500k on the way out the door and who knows how much compensation while leading the company for 6 years, knowing he was failing. His replacement, Brian Harrison was bragging about doubling in size just two months before filing for bankruptcy. The United States Congress was none to happy and when they dragged Harrison in front of the chamber, he took the fifth. He wouldn’t speak or explain himself, but don’t worry his career isn’t over. He is now a sr vice president of Taiwan Semiconductor. That’s right, the very same company that we told you was getting a large chunk of the semiconductor money in the Chips and Science Act signed by Joe Biden in August of 2022. Bloomberg reported in 2011 that Solyndra’s $733 million dollar plant had whistling robots and spa showers, along with many other signs of extravagant spending. The spending will be extravagant in the new Inflation reduction act that is paying for a bunch of this new infrastructure and the rest will go into the pockets of these executives that will be dusted off and ready to play the old playbook again. I will still be shouting Who’s gonna buy the bonds as our government keeps trying to spend money it doesn’t have. Do you know the main reason why Solyndra failed? The price of polysilicon, the competing technology at the time dropped by 89%, which was when China cornered the market and broke an American backed company in less than 2 years. Beware the Green Chimney because not only is it unhealthy to get smoke blown up your ass, but you will also get your ass burned. This isn’t new we are in re-runs.
Sincerely Yours,
C Thomas Printer
This week’s financial tip
Buy a pair of scissors and cut up your credit cards that you don’t use, and don’t have an annual fee.
On this date in history
15 years ago to be exact… Fidel Castro resigned power and was succeeded by his brother Raul. The Cuban Hitler is still reviled by generations of Cuban-Americans. Obama and John Kerry’s opening up relations with Cuba is a large reason why Florida is dominantly Republican today.
Also born on this date
The renaissance man Nicolaus Copernicus, the man that set the sun as the center of the universe and not the earth. He also gave us the monetary principle that bad money drives out good money which became known as Gresham’s law. When gold becomes scarce and lots of printed dollars are worthless but everywhere in circulation, he will again become a household name.
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