What to do about China cornering Cobalt Market

Cobalt Market

The Cobalt Market is in the news these days and this fact brings an opportunity for me to make a comparison between political philosophies of China and the United States. China is in the process of gathering an enormous share of the Cobalt Market and this presents a problem in that the element is a key component in the production of lithium-ion batteries. These batteries will drive the future of energy storage.

The fact that China now has control of a large share of the cobalt market is largely because that nation implemented a strategic, long-range plan called Belt and Road which I wrote about a few years back. Belt and Road encouraged economic ties between China and so-called third-world countries for the development of raw material. Almost fifty percent of all cobalt in the world is mined by the Democratic Republic of the Congo and this is because China invested money to build both mines and economic ties with Congo.

Belatedly, the United States realized this is a problem. Companies around the world need cobalt to produce lithium batteries and China, for the foreseeable future, has most of the mineral rights. Now comes the pertinent part of this blog. What can the United States do? There are two competing philosophies on the subject; essentially America First and Globalism.

The America First philosophy is largely promoted by the Trump Administration and its nationalistic backers. They want to encourage cobalt mining in the United States to ensure a supply of the vital element. By encourage, I mean give government money, taxpayer money, to companies to build mines and refining facilities. To ease environment restrictions and pass tax breaks along to companies who do so.

The globalist policy is pushed by a variety of backers and largely suggests investing in soft power, good foreign relations with countries like Australia with proven reserves of cobalt. This policy relies on strong economic ties with allies throughout the world. This is largely the policy that China pursued with Belt and Road and which has secured them enormous mineral rights with allied nations across the globe.

It’s important to understand one of these philosophies is largely socialistic. It relies on government rewarding businesses that behave in a way it desires. It is not direct socialism but crony capitalism which in the end is probably worse than socialism. The government wants cobalt. It bribes companies to mine the element.

The other method relies on capitalism and strong ties with foreign countries. This is a policy that has driven in the United States almost since its founding. We cannot, and should not, try to be self-reliant for all things, for the simple reason that such a policy is doomed to failure.

If we have strong alliances with countries that have natural resources, we will always have a supply chain. If we rely on our government to use our tax dollars to setup a financially unsustainable source here, we are doomed to both supply problems and a forever drain on our economy.

China’s Belt and Road is the proper strategy and its one the United States pursued for over two-hundred years, with great success. Our freedom was exported throughout the world and our alliances were strong.

We can certainly attempt an America First policy and this will, eventually, produce a home built cobalt market but it will never be enough. It is an endeavor doomed to failure and socialistic to boot. I know the America First people don’t like to hear it, but you are socialist, far more dangerous, in many ways, than those who actively promote socialism.

Tom Liberman