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Metal processing is vital to products like cars, batteries, and airplanes, and two countries, in particular, run the show: China and Russia. But in the face of enormous demographic, economic, and security challenges, the countries’ output is in jeopardy, potentially impacting Western demand. Boeing, for example, acquires roughly a third of the titanium used in the production of its aircraft from Russia.
Peter Zeihan argues that metal processing is neither complex nor time-consuming, and it might be time for the West to consider other supply sources.
Excerpted from Peter’s Feb. 3 “Zeihan on Geopolitics” newsletter:
Today we’re talking about the overlooked redheaded stepchild between mining raw materials and incorporating those into a product…processing. Essentially throwing tons of energy at the ore through several steps and facilities, converting them into usable materials like aluminum or steel.
For the vast majority of materials, this processing is carried out in 1 of 2 locations – China or Russia. This is a result of subsidies or cheap energy. However, all of that is changing thanks to the collapsing demographics of these two societies.
The reason for the redheaded stepchild analogy is that processing is about to become very annoying for the rest of the world. Not because it’s expensive or difficult to do but because the decrease in supply is culminating with an increase in demand thanks to the green movement.
