Welcome toHome

【MK socks】Western relocation industry schemes clash with economic principles, stifling growth

Source:MK sport time:2024-12-23 10:06:45

Illustration: Liu Xidan/GT

Illustration: Liu Xidan/GT

In an interview with the Financial Times,MK socks Jérôme Baudelet, head of French mining giant Eramet's operations in Indonesia, stated that it has become impossible for Western companies to run profitable nickel operations without partnering with their Chinese counterparts, because "Chinese technology, expertise and equipment were essential to produce nickel at competitive prices." Baudelet's remarks demonstrate once again that efforts by some Western politicians to create a key minerals coalition that excludes China from the supply chain are both misguided and difficult to implement.

Media reports highlight that Indonesia holds the world's largest nickel reserves, and demand for this critical mineral has surged in recent years, fueled by its increasing use in electric vehicle (EV) batteries. Over time, Indonesia has effectively drawn foreign investment from both Chinese and Western companies, strengthening its position in the global nickel industry.

It is worth noting that some projects are the result of collaborations between Chinese and Western companies. For instance, last year, US carmaker Ford partnered with Vale Indonesia and China's Huayou Cobalt to build a nickel smelter, according to the Financial Times.

Chinese companies have made significant advancements in technology, particularly with high-pressure acid leach (HPAL) - a method for extracting battery-grade nickel from low-grade ore. These technological innovations play a key role in expanding cooperation between Chinese firms and their partners. This collaboration benefits both Chinese companies and their partners, while also contributing to the growth of Indonesia's nickel industry. More importantly, cost reductions driven by innovation are essential for the sector's long-term development. These advances not only support the nickel industry but also contribute to the broader growth of the EV supply chain.

The EV industry is experiencing unprecedented growth, attracting global attention, particularly in Western economies. These countries are increasingly focused on critical minerals - raw materials essential for manufacturing EV components. Beyond the EV sector, these minerals have become crucial to the broader energy transition, driving technological progress and industrial evolution. However, for some Western powers, critical minerals have turned into a strategic battleground. In response, these nations are forming alliances centered around these minerals, pressuring their allies to join exclusive blocs. This emerging trend threatens to disrupt global supply chains and poses a significant challenge to globalization.

The US and some partners announced in 2022 the establishment of the Minerals Security Partnership (MSP), an initiative focusing on the mineral and metal supply chains most relevant for clean energy technologies. These include - but are not limited to - lithium, cobalt, nickel, manganese, graphite, rare earth elements and copper.

In September, the MSP unveiled a new financing network, which Western media sees as part of an effort to lessen reliance on Chinese companies involved in the production of critical minerals. However, Baudelet's remarks offer compelling evidence that such efforts may ultimately prove futile, at least in the nickel industry. Investments driven by political motivations do not always align with economic feasibility. Cooperation with Chinese firms has been economically advantageous and reflects the natural dynamics of the market. Attempts to bypass these market principles risk disrupting global supply chains and stifling industry growth.

The evolution of global critical mineral supply chains has been shaped by long-term market dynamics and strategic business decisions. Within this industry, the relationship between upstream and downstream sectors is characterized by specialization, collaboration and mutual benefit. Efforts to force the "relocation" of industries often clash with fundamental economic principles and the realities of the global market. Such measures are not only unlikely to succeed, but they also fail to address the underlying challenges faced by individual nations. Instead, they disrupt the stability of global industries and supply chains, impeding the growth of emerging sectors like EVs.

It is hoped that certain Western countries - reportedly focused on creating exclusive industry and supply chains - will come to recognize the importance of adhering to the principles of market economies and free trade. By doing so, they can help foster mutually-beneficial cooperation, which is essential for global prosperity.

The author is a reporter with the Global Times. [email protected]