Protection against the “storm” Entry 10

I do it to incorporate a single news item of the change in the global context that I consider very important. There is no need to put explanatory links. Everyone knows that Pope Francis has died, and that the new Pope Leo XIV has been elected.

Some people may not give enough importance to this fact. But the fact is that the Catholic Church has some 1.4 billion followers. It is also a fact that, in the current situation of the world, with many people “disoriented”, religions will have more influence than before, because people will look for values in which to take refuge.

This new Pope is going to be a very relevant figure in the search for international agreements for peaceful coexistence. Some of this could be seen in the Mass at the beginning of his pontificate, as shown in the photograph.

And, given his profile as an American citizen, but cultivated in the countries of what used to be called the Third World and is now called the Global South, as well as given his reputed diplomatic skills, he may represent an internal counterweight to the Trump administration.

Just as John Paul II proved to be a fundamental actor in the fall of the USSR, it could be that Leo XIV will be a fundamental actor in the “redefinition” (I am not going to say fall) of the US empire.

We will have to watch developments closely.

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Rare earths.

The first thing to say about rare earths is that their name is misnamed. As they say, they are neither earths nor rare. It is something from the 18th century that was not changed. So this name should not scare us.

A set of 17 chemical elements of the periodic table are called rare earths. Specifically, they are scandium, yttrium, lutetium, and the lanthanides.

As individual chemical elements, they are like most chemical elements: they are not found in a pure state in nature. They exist as part of rocks or clays. Industrial processes are therefore necessary to separate them.

The problem with their exploitation, compared to other elements such as gold, is that they are not found concentrated in veins. They are in many places, but forming a very small part of the rocks or clays. That means that huge amounts of rock have to be processed to obtain small amounts of the final product. For every ton of rare earths mined, up to 2,000 tons of waste can be generated, including dust, sludge and wastewater. Managing this volume is a logistical and environmental challenge.

In addition, in the case of mining a deposit in which rare earths are sought as part of rocks, there is a significant cost in the energy consumption of crushing the rocks and then separating the rare earths by certain chemical processes. This is not necessary if they are found in clay deposits. The problem is that most of the known deposits in clays are in China.

Although they are grouped under the name of rare earths, because they have some similar characteristics, each of these chemical elements has different properties and uses, all of them closely related to what can be understood as “modern technologies”, i.e. renewable energies, computers and electronics, spacecraft, laser beams, LED lights, … It is because of these types of uses that they have become so fashionable now. Whoever manages to control these resources will be able to advance in technology.

As for the uses of rare earths, as an example we can say that neodymium (one of these 17 elements) is very important in the manufacture of generators for windmills, and in electric cars; or that lanthanum is very important for the batteries of hybrid cars. It would be very long to put here a complete list of the utilities of each element, but I leave here the link to the Wikipedia page where there is a table with this list.

In the current situation, China controls 90% of the production of rare earth mines in operation (many in China itself, but also in Africa and Kazakhstan). The West, therefore, has serious supply problems, especially if China decides to bring rare earths into the current tariff war, which is something they are already proposing.

It must be said that the reason for the lack of mines in the West is not because of a shortage of deposits, but because of the high pollution generated by their exploitation (including radioactive contamination). That is why it was decided to leave this work to China, which is now seen as a risk. Trump’s recent interest in Greenland is no coincidence, since there are deposits there with 25% of the world’s rare earth reserves.

In short, rare earths are badly needed for new technologies, and the West has a poor current position in this resource.

It is curious that, being necessary for renewable energies, they are very polluting. That is, the “green transition” pollutes. Well, well, …

For all these reasons, any western company working with rare earths will be a potential good investment. It was not before, because they had many environmental problems for their licenses, but it is foreseeable that these problems will be softened by the need.

In addition to the mining companies, we should also consider those processing the elements, and recycling (which is very viable, and less polluting). Another aspect to pay attention to is the development of new technologies that allow the extraction of rare earths with less pollution, i.e., it will be necessary to pay attention to science in order to invest as soon as patents are developed.

It should also be noted that there are many existing mines dedicated to other types of minerals (such as, for example, lithium). In these mines, after the extraction of what they were looking for (lithium), the leftover material is generated, which is called “tailings”, and is stored in a similar way to a landfill. The truth is that these tailings may contain rare earths in the already crushed material. In other words, the existing tailings from these mines of other material can be a good mine of rare earths.

Among the many companies working in the sector in the West, the following are interesting to follow: MP Materials, Lynas Rare Earths, and Iluka Resources.

For these companies, and for any others involved in the sector, aspects to watch out for are: their ability to finance future new mines; the feasibility of obtaining licenses quickly; regulations that “relax” their environmental problems; and new patents that allow them to extract resources more efficiently. In addition, the time factor must always be taken into account at the time of investment, as the process of moving from theory to profitable reality in this sector is a long one.

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Readings that have interested me.

In the process of writing this entry I have come across many issues of other subjects. I would like to share the following:

George Friedman has written on John Mauldin’s website (here). His analysis of the changes in recent geopolitics is well worth reading.

Zerohedge has published a sensationalist article (as is their wont), but one that gives much food for thought. They come to say that China, which is the world’s largest producer of solar panels, is incorporating, in the panels it sells to the West, a device that can be activated remotely to knock down Western energy grids when it sees fit. I have no idea if this is true, but it would make sense and is disturbing (news here). It could generalize what has happened in Spain with the recent blackout.

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As always, I welcome comments on my email: pgonzalez@ie3.org