Recommended Weekend Reads

May 5 - 7, 2023

Here are our recommended reads from reports we read in the last week.   We hope you find these useful and have a great weekend.   And let us know if you or someone you know wants to be added to our distribution list.

·       “The Rising Geopolitical Importance of Argentine Lithium” The National Interest Argentina’s mining exports hit a historic high of $3.86 billion, driven by robust lithium income. Indeed, lithium exports surged 234 percent from a year earlier, accounting for a fifth of all Argentine mining shipments. Whoever wins this year’s Argentinian elections will have a say in whether the federal state plays a larger role or if the country will maintain an investment regime that is open to foreign investment. Foreign governments are watching closely.

·       “The Strategic Repositioning of LNG: Implications for Key Trade Routes and Choke Points”  The French Institute for International Relations

2022 saw the climax so far of the weaponization of energy. The rupture between Russia and the West will have lasting and reverberating impacts on the geopolitics of commodity flows. Some shipping routes have already gained in traffic while others have declined, and as a result, the risks around chokepoints and the safety of navigation are fast-evolving. The share of exports from the OECD countries will continue to grow and have a stabilizing impact on the safety of shipping lanes. The post-war LNG trade pattern shifts will likely consolidate the Atlantic route between the U.S. and Europe as well as the North Sea Route for the bilateral Russia-China trade if icebreakers can be built while possibly reducing traffic via the Panama Canal and the Suez Canal. Other geopolitical risks loom large, including a Taiwan blockade and U.S.-China systemic confrontation. Hormuz remains a flashpoint, even if the latest Saudi-Iran rapprochement, and China’s agenda to reduce any risk of blockage, ease regional tensions.

·       ‘Nasty battle’: States fight states for EV, battery plants” E&E News

The lucrative federal incentives in last year’s Inflation Reduction Act are playing a key role in luring automakers and others to open EV-related businesses in this country. Separately, states and municipalities are on a “megadeal spending spree,” offering up around $14 billion in subsidies to attract EV and battery plants, according to a study by Good Jobs First, a nonprofit watchdog critical of government economic development subsidies.  Electric vehicles are the new frontier in what has always been a fraught process — states competing to devise ever-enticing tax and subsidy packages to attract hot companies. State leaders are looking at EVs and related industries as key to future economic development, particularly as the auto industry moves away from gas-powered cars. They want the jobs and tax revenue. These initial projects might also be the seeds for future industry investment as other companies sprout up near those at the vanguard. But economic development subsidies can be a drain on state and local government coffers, leaving some critics to question whether they are worth the public investments.

·       “Friendshoring Critical Minerals: What Could the U.S. and Its Partners Produce?” Carnegie Endowment for International Peace

Given existing reserves, it is possible for the United States and its key democratic partners to significantly friendshore the production of critical minerals. However, it would require an unprecedented buildout of the mining industry to achieve clean energy targets for 2030.

Chart of the Week 

Russia’s Arms Export Business Is Collapsing

From ForeignPolicy.com: “After cresting in the early 2010s, Russian arms exports have fallen to levels not seen since the collapse of the Soviet Union. The Wall Street Journal referred to Russia’s precipitous decline in arms exports as among “the casualties of Russia’s war in Ukraine.” 

But the timing doesn’t add up: According to data from the Stockholm International Peace Research Institute, Russia’s arms exports began falling in earnest in 2019, and were already down nearly 20 percent relative to 2011, the high-water mark for the Russian arms industry. That year, Russian arms exports nearly matched U.S. arms exports and were delivered to 35 different countries. Eleven years later, Russian arms exports had fallen by nearly 70 percent, with deliveries to just 12 countries.

If the war on Ukraine dealt the knockout blow to Russia’s arms exports, the industry had already been on the ropes for some time.”