Future Facing Commodities: Copper, Nickel & Potash
In this writing I want to answer three of the most basic questions about Future Facing Commodities: What are Future Facing Commodities? How to understand the global phenomenon of Future Facing Commodities? Why does it matter to the Global Economy?
What are Future Facing Commodities?
- Copper
Ever since China’s MMG bought the Las Bambas mine from Glencore for $5.85 billion in April 2014 the mining company has faced continuous opposition from Peruvian indigenous groups over the control status of the mine’s production — e.g. force majeure declared in 2019 and roadblock obstruction in 2021 — that has devestated output for a country who consumes over half of the world’s copper.
There have been many reasons cited for why Las Bambas’ indigenous groups have put up a struggle against China’s mining activities and businesses, such as labor and payment concerns; environmental issues and local grievances toward the destruction of the mine itself.
But China’s MMG has stated that it wants to take this opportunity to contribute to Peru’s economy. They have trived to give the indigenous groups ample reasons to cooperate. They were consequently invited to have talks with the company on May 6, 2022.
- Nickel
One of Tesla’s most important lithium suppliers is a Chinese company, Contemporary Amperex Technology (CATL). The two companies partnered up on a deal for CATL to supply Tesla with lithium-ion batteries from 2022–2025. This is possibly the most important partnership in the EV sector, as far as raw materials procurement is concerned.
This was soon followed up by Elon Musk’s famous quote to global metal miners: “Any mining companies out there … wherever you are in the world, please mine more nickel…Tesla will give you a giant contract for a long period of time if you mine nickel efficiently and in an environmentally sensitive way.”
On July 21, 2021, BHP Group answered the call by signing a deal with Tesla to sustainably produce and supply battery metals from its Nickel West project in Western Australia. This was followed by another deal with USA-based Talon Metals to secure nickel supplies for a mine projected to begin production in 2026.
- Potash
In 2021, during the time of Nurtrien Ltd.’s CEO transition there was high speculation among reporting agencies and commodity analysts about a Nutrien Ltd.-BHP Group partnership for the development of a potash mine in Jansen, Saskatchewan, Canada.
It’s true that BHP has been divesting its oil and gas assets for “future facing commodities” such as potash. In a statement to The Financial Post the company said “Potash provides BHP with increased leverage to key global mega-trends, including rising population, changing diets, decarbonization and improving environmental stewardship.”
However, most of the talk about a proposed partnership or joint-venture has died down since sanctions were targeted at Belarus’ potash industry and largest producer and exporter in December 2021. (Belaruskali is one of Nutrien’s biggest rivals in the potash fertilizer segment. It makes you wonder doesen’t it?)
But looking elsewhere in the fertilizer scenario puts a spotlight on potash. Russia stopped exporting potash due to the conflict in Ukraine. Brazil acted quickly on this circumstance by pushing ahead with one of the key strategic advancements in the National Fertilizer Plan: mining for large reserves of potash underground in the Amazon Rainforest.
It’s a fact that Brazil’s potash reserves lie within lands owned by indigenous peoples. And it’s the reason for why an indigenous mining bill has been held up in the Congress. A crowd gathered for the “Earth Event” during which legendary Brazilian musician and artist Caetano Veloso led the protest against the mining bill. It was reported that Veloso met with the Senate to plead for not letting the bill pass.
How to understand the global phenomenon of Future Facing Commodities?
There’s already a trend happening whereby indigenous groups are organizing to stop economic endeavours in building and mining projects all over the world.
Just look at the example of a casino building project in the United States — Pope County, Russellville, Arkansas. Although the county and its constituents are involved in trying to stop the building of a casino there, actually there is a competing Native American tribe who was the largest donor to the organization trying to stop building the casino. (Background: there was originally a bidding process on who could build, own and operate the casino; it came down to two Native American tribes and one of them lost).
I say all of this to give an example of the larger trend — indigenous groups are coming out in opposition as more and more mining projects are being put in the works to spur economic activity during the global commodity supercycle.
Many of these mining projects, especially the ones for potash, copper and nickel, are critical to achieving both the Energy Transition and the Electric Vehicle (EV) production rollout.
Why does it matter to the Global Economy?
There’s a global food crisis and the world needs Brazil to produce more food, because it is already one of the world’s largest food-producing countries along with Ukraine.
Anyone who is interested in the future of global economic development or global commodities trading should read this extensive piece I put together about the next biggest global phenomenon in global mining and Environment, Social, Governance (ESG): the aspects of producer economy areas and indigenous groups’ issues.
These trends are part of the much larger geopolitical trends that have been kickstarted by the global COVID-19 pandemic. The global pandemic has caused several countries to unravel, with socio-political instability that was building up for decades, and causing the global economy to be shaken up with uncertainties, putting the world’s largest companies in some of the most vulnerable areas.
Join Coinmonks Telegram Channel and Youtube Channel learn about crypto trading and investing