Today’s video was made possible by Masterworks.
Masterworks is the only platform making it possible to own part of a multimillion-dollar
work from iconic artists like Picasso, Andy Warhol, and many more.
Skip Masterworks waiting list using our link below, more on this later.
Could it be possible that the mobility of the future, the much-vaunted electric mobility,
with all its promises of decarbonization, depends on countries like the Democratic Republic
of Congo?
Yes, yes, you heard correctly and no, I haven't lost my mind or anything like that. So remember
this name: Democratic Republic of Congo.
Ok VisualPolitik fans, I am convinced that every time we talk about the electric car
our minds jump to things like the environment, trees, forests, clean transportation, clean
air and animals.
That is, if we buy an electric car, we may at some point, perhaps, even see ourselves
as a kind of superhero. A brave crusader saving the earth in the face of dirty combustion
engines.
But... What if the reality wasn't exactly like that?
[Let’s take a moment because before continuing I would like to make a small clarification.
Our goal with this video is not to trash the electric car, nor to criticize its technology,
or anything of the sort.
Yes, there may be reasonable doubts about whether or not the technology is mature enough
or whether or not the future will really go with the electric car, but it is undeniable
that it has significant advantages, particularly when used in large cities].
Now, all that is true, but perhaps it is also true that advertising and politicians have
ensured that every time the electric car comes up we always bring out its more positive side.
Which has basically created a kind of mystical worldview around this technology.
And precisely for this reason, we believe that we need to talk more about the implications
of this technological change. Environmental, social and, more importantly, geopolitical
implications.
And that is precisely why we have prepared this video.
Take a look at this graph, for example. What you are seeing on the screen is no less
than the amount of minerals needed to manufacture an electric vehicle and a conventional vehicle
if we exclude the consumption of steel and aluminum.
As you can see, to manufacture an electric car, a lot more minerals are needed. Approximately
6 times more.
And it's not just about quantity. It is also about variety. While the manufacture of a
conventional car needs barely any copper and manganese, electric cars also require a significant
amount of lithium, nickel, cobalt, graphite and a selection of rare earths.
This not only makes production more expensive, but also requires much more complex supply
chains.
For example, in addition to much more mining, more minerals must also be transported from
their place of production to the places where they are processed and finally used.
And of course, the means of extraction and transportation are not exactly clean. From
machinery to ships, we are talking about activities that use lots and lots of diesel.
And take note, because this is just the beginning.
Do you want to get to know the less attractive side of the electric car, the side the activists
and politicians refuse to tell us about?
Do you want to know exactly what the mining transformation that is underway looks like?
And what may be even more important:
Do you want to know who the main players are in this whole mining revolution that is taking
place?
Well... Let's get started...
(THE UGLIEST ASPECT OF ELECTRIC VEHICLES)
Well VisualPolitik community, as we have just told you, manufacturing an electric car requires
six times more quantity and three times more variety of materials than manufacturing a
conventional car.
So the question is, what does all this entail?
Well, take a look at this graph. The countries you see on the screen are the
countries that, in principle, will benefit the most from mining thanks to the electric
car.
It is worth highlighting those that have the 4 minerals that we can classify as essential:
copper, graphite, nickel and, of course, lithium.
In this case, among the major players we find countries such as Chile, China, Australia,
Indonesia... And also other lesser known countries such as the Democratic Republic of Congo,
a country that today has a virtual monopoly on world cobalt.
No less than 70% of all the cobalt used in the world comes from this sub-Saharan African
country. Do you understand now why at the beginning
of the video we said that electric mobility depended on the Democratic Republic of Congo?
A country with a terrible history which, by the way, we already covered here, on VisualPolitik.
In case you haven't seen it, I’ll leave the video link in the description.
But... Let's not get sidetracked.
The fact is that getting hold of all the minerals needed for electric cars is no easy task.
We can, for example, take a look at the case of Cobalt and the Congo. This mineral represents
one of the largest – if not the largest of all – sources of income for the country.
To give you an idea, the Democratic Republic of Congo produces more than 95,000 tons of
cobalt each year, an amount that was steadily increasing until 2020, when the freeze in
world economic activity caused by Covid-19 brought this growth to a screeching halt.
The fact is that of the 95,000 tons of annual production, almost one-fifth comes from artisanal
and rudimentary mines whose cobalt production is sold mainly through a state-owned company
called EGC.
As you can imagine, these types of mines, which have proliferated like mushrooms, lack
acceptable conditions in terms of occupational safety, environmental protection and wages.
In fact, the miners who extract this cobalt, which is essential for the manufacture of
electric cars, earn less than $3 dollars a day. And note that we are talking about marathon
working days that run from early in the morning until late at night. Many reports clearly
label this situation as semi-slavery.
However, the accelerated switch to the electric car that is being imposed by public regulations
has made it necessary to look the other way with respect to these types of mines, which
in most cases are located close to population centers.
But that's not the only problem. In environmental terms – which is, after all, the crux of
the whole electric car issue – many mines also have a lot of problems.
For example, according to a 2021 German report, artisanal mines lack virtually any measures
to mitigate the environmental impact of cobalt mining.
For example, wells are not decommissioned when activity ceases, there is no waste management
In addition, the mineral is often washed in natural waterways that then become contaminated.
In many cases in water sources close to residential environments that then directly or indirectly
are used for human consumption. Let's not forget that we are talking about Sub-Saharan
Africa and that water management here is... A bit complicated, to put it mildly.
Then there is also the problem of uncontrolled dust emissions. Emissions that in dry seasons
generate clouds laden with cobalt microparticles that are toxic to humans and cause respiratory
diseases and cancer.
And remember that we are not talking about isolated cases. Although these irregular mines
account for only 20% of production, it is estimated that there are between 150,000 and
200,000 people working directly in them. And more than one million depend on their activity.
Of course, none of this is, in itself, the fault of the electric car, but the increasing
regulatory pressure in favor of the electric motor has encouraged all players to look the
other way.
Now, not everything we can say about the mining revolution is bad, not at all. We can also
find many positive things.
And one of them, precisely, has to do with the economic impact.
Many of the countries producing these key minerals will be bringing in huge amounts
of money that they can use to try to escape poverty once and for all.
That is, as long as there are no corrupt politicians involved. [Which, let’s face it, is unlikely]
Politicians such as the former president of EGC, the Congolese state-owned company that
controls a large part of cobalt production, who was dismissed in 2021 after being found
responsible for looting $8.8 billion.
Money that has basically disappeared. (3 December 2021:Congo Ousts Mining Leader
in a Cloud of Corruption Claims – The New York Times
The chairman of the Democratic Republic of Congo's state mining company was ousted on
Friday after longtime allegations that billions of dollars in revenue had gone missing)
Fortunately, it’s not all bad news. And in the face of all that we have told you,
mining investments are also improving the situation of many families who now have a
job and a stable source of income.
But, at this point, many of you may be wondering:
But let's see [host], if manufacturing an electric car requires so many different minerals,
and those minerals are in such poor countries, there must be some more developed country
or big companies that control the whole process, right?
Yes, you are right. And in fact, one country in particular controls much of the production
and processing of key minerals for the energy transition.
Any idea which one it might be? No? Well then... Let's take a look.
But before..
There’s one word you’ve probably been hearing a lot over the past few months: inflation.
Simply put, inflation erodes the purchasing power of money. Even slight inflation at 3%
annually halves the value of money in 24 years. So if your long-term investments are not at
least outpacing inflation, you’re in a bad spot..
Up until now, the usual way to hedge against inflation was to invest in gold, stocks or
even real estate. But there are new alternatives and we want to show you a very interesting
one: art.
The art market is valued at $1.7 trillion and Deloitte estimates that it could grow
another $900 billion by 2026.
What’s more, it’s proven to be very profitable.
Contemporary Art returned 23.2% during periods with 3%+ inflation (aka now). The S&P 500
returned 3.8%.
In fact, amongst the great fortunes, it is a very typical bet. Billionaires from Jeff
Bezos to Bill Gates have used art as an store of value for generations.
Okay, I’m sure you’re thinking, but Josh, what do I care about this? That stuff is totally
out of my league. I’m not a billionaire, Josh!
Well… Hold on because that’s where Masterworks comes in. Masterworks’ mission is to make
it possible for anyone to invest in great works of art through fractional shares.
With Masterworks, you can buy shares pieces of art that help to protect you from inflation;
and even make a significant return. Since launching in 2019, they’ve returned over
30% to their investors every year, which is pretty impressive considering how much of
a roller coaster the markets have been on.
So it’s no surprise that they were recently valued at over a billion dollars!
Just go to the website using our link below to skip the waitlist and create an account.
After that, you can browse their selection of works, like this painting here by Pablo
Picasso, and select how much you want to invest.
When Masterworks sells the painting, you get your portion of the proceeds.
And as always, in everything related to investment: tread carefully. Nothing is risk-free.
(THE BATTLE FOR THE NEW MINING REVOLUTION)
VisualPolitik viewers, I just asked you a question to which many of you no doubt already
have a clear answer and many of you are likely still hesitant.
Which country today controls the extraction and processing of the so-called minerals of
the future?
The United States, the Netherlands, perhaps Switzerland?
Well... Actually, no.
In this case the answer is .... Yes, sorry, it was not our intention, but we have no choice
but to talk, once again, about China, the People's Republic of China.
With 1.4 billion inhabitants, the second largest army in the world, the largest industrial
production and a government that has been in the limelight lately, how on earth can
we not talk about China?
We need to get used to it, because whether you like it or not, the Chinese are going
to be more and more frequently the main protagonists of international news.
And this case is no exception. Take a look, for example, at this other graph.
As you can see, China controls the processing of almost all key minerals for the energy
transition, from electric cars to macro-batteries to solar panels.
In other words, we could almost say that China controls the energy transition that Western
governments want to undertake.
(As US Invests in Clean Energy, There's a Big Problem: China Controls the Supply Chain.
CBN News)
Now, the question is, how on earth is this possible? How on earth can China control the
processing of minerals that even they do not produce?
Well, the answer seems simple: they have been quicker or at the very least, they have taken
it more seriously. Let's say that the Chinese government had a very clear idea that, given
the direction in which they were going, it could be very worthwhile to control both the
production and the transformation of these minerals.
So no sooner said than done. Chinese companies rushed to buy mining companies like there
was no tomorrow.
As you can see, we are talking about something like the holy grail of the coming decades:
the most sought-after, most in-demand and most critical resources.
Take a look at this other graph. What you are seeing is no more and no less
than how the demand for each and every one of these resources is expected to evolve.
And you can see that, by 2040, demand for lithium is expected to increase 42-fold, graphite
25-fold, cobalt 21-fold, nickel 19-fold and rare earths 7-fold.
You don't have to be a renowned political or financial analyst to realize what this
could mean: the strategic dependence of many Western countries on China will skyrocket.
The question is, does this mean that China will have the upper hand? Well... Yes and
no, or at least not quite, at the same time.
Let me explain. On the one hand, China controls most of these minerals, so its influence could
be enormous.
But, on the other hand, we can’t forget that technological evolution, exploration
and the search for viable alternatives could help to mitigate – but not eliminate, of
course – this dependence.
For example, we have the case of hydrogen fuel cell vehicles, a technology that we already
talked about here on VisualPolitik. I’ll link that one for you in the description as
well.
The hydrogen car, unlike the traditional battery electric car, has a much less intensive use
of all these minerals.
For example, hardly any copper, cobalt, nickel or lithium are used in their manufacture.
It is only more intensive in the use of rare earths, aluminum and, above all, platinum.
This material is currently in very short supply, but there is plenty of scope for new operations.
And the question is, where is platinum produced and is it also in Chinese hands?
Well... You see, two-thirds of all the platinum produced in the world originates in South
Africa, and a long way behind, in Russia.
And this is where the good news comes in for all those concerned about over-dependence
on China: not a single one of the world's five largest platinum-producing companies
is controlled by the Asian giant. Not a single one.
And unless Xi Jinping is watching this video, it doesn't look like things are going to change.
Today platinum is controlled by American, British, South African and Russian companies.
So does all this mean that electric car technology could become something of a booster of China's
geopolitical and geoeconomic influence? Curious question, don't you think?
Be that as it may, neither Tesla, Renault nor Volkswagen are set to become the major
players in the transition to the electric car. Above them all may be China.
At least that seems to be Xi Jinping's ambition.
But having said that, it's your turn:
Do you really think it could be dangerous that China controls the main minerals linked
to the energy transition? Do you think Western governments should do something about it?
Would it be a good idea to continue with the hydrogen car instead of the conventional electric
car?
Leave us your answers below in the comments. And you know, if you found this video interesting
don't forget to like and subscribe to VisualPolitik.
Best regards and see you next time.