The January 11, 2023 headline was "Get ready for a new wave of resource nationalism".
'Tis but a hop, skip and jump from nationalism to nationalization.
And it wasn't just that Asia Times headline. Zoltan Pozsar said it as well:
....Commodity intensity means that inflation will be a nagging problem as the West executes on the above list. Re-arming, re-shoring, re-stocking, and re-wiring need a lot of commodities – it’s a demand shock. It’s a demand shock in a macro environment in which the commodities sector is woefully underinvested –a legacy of a decade of ESG policies. Underinvestment means supply constraints, and geopolitics means even more supply constraints: resource nationalism– see Russia’s stance or Mexico’s recent decision to nationalize lithium mines –means that the supply you think is there to meet the surge in demand isn’t there: prices can thus surge. Executing on the to-do-list can easily drive another commodity super cycle, like the one we had after China joined the WTO in 2000. But that super cycle happened in the context of a peaceful, unipolar world order in which great powers had positive expectations of the future trade environment (see the “theory of trade expectations” above). But that’s not the case anymore.....
We visited that communique twice, when it came out in August and again in September 2022's Re-reading Zoltan Pozsar's August 24th Missive, "War and Industrial Policy".
Along the way there have been a half-dozen other recent examples, Serbia with Europe's biggest lithium deposit, Indonesia with their nickel and so on and so on.
Today's headline story is from Investor's Business Daily:
Lithium stocks, already sliding as prices dive for the key metal used in batteries, are taking another hit after Chilean President Gabriel Boric announced plans to nationalize the industry. SQM (SQM) and Albemarle (ALB), which both have major lithium extraction operations in Chile, both fell in early Friday stock market action.
Chile ranks behind Australia as the second-biggest lithium producing nation. But Chile is No. 1 when it comes to lithium reserves, according to the U.S. Geological Survey.
Lithium Nationalization Plan's Big Questions
Boric sketched out his nationalization plan only in the broadest terms. He aims to seek approval by the Chilean Congress later this year, though it has stymied Boric's agenda on multiple fronts.New contracts to mine lithium will be public-private partnerships with state control, Reuters reported. Existing contracts won't be canceled. However, Boric said he hoped the companies would be open to a state role even before expiration, according to Reuters.
Impact On Lithium Stocks SQM, ALB
SQM's contract expires in 2030, while Albemarle's mining rights in the Salar de Atacama brine deposits run to 2043....
....MUCH MORE
Albemarle, the world's largest lithium miner is down $17.47 (-9.05%) at $175.58, number 2, Sociedad Química y Minera de Chile S.A (SQM) is down $14.24 (-18.28%) at $63.67.
We probably have a jaundiced view of these things. As an excuse to reminisce about Hugo Chavez in last week's "EU Will Return Frozen Russian Reserves".
And way back in 2009:
Lithium: In Bolivia, Untapped Bounty Meets Nationalism
And plenty of points in between.
