Far East Capital Newsletter
Considering input supply issues in the move to alternative energy
12 Jun 2021

In This Issue


Considering input supply issues in the move to alternative energy

The debate between the climate change advocates and sceptics seems to have dissipated. Whatever the science tells us, rightly or wrongly, the reality is that the world is going down the path of CO2 emission reduction as fast as it can. Every company is adding “green" to their business model and their promotional material with varying degrees of legitimacy.

The next issue is the supply chain required to facilitate the conversion to “green" energy. What materials will be needed and where will they come from? Will there be another surge in commodity prices on top of the doubling of lithium prices and 70% increase in copper prices that we have seen over the last year? Will prices rises lead to boosts in supply, or are there practical issues of supply expansion that mute the price response? Can new projects be fast-tracked in a world that is being strangled by red tape and compliance, not to mention social issues?

According to an article in The Economist, the market for key minerals needed to build clean-energy kit will need to expand seven-fold in order to meet targets for 2030 and 2050. The bottlenecks in supply bring into focus the Chinese octopus that has its arms all over the world, but particularly Africa. What are the political and strategic implications, remembering that Western supply chains are driven by economics rather than strategy planning? 

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