Economic Security and Raw Materials Why strategy matters

Michel Rademaker

2015-01-30

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Exponential Population Growth

• Population by 2050 – 9 billion

• GDP from US$35 to 72 trillion by 2030

• Water demand to increase 30% by 2030

• Energy demand doubled by 2030

• Cereal demand: + 67% by 2050

• Land deficit by 2050 – 200 million ha

• GHG emissions decrease 50-80% by 2050

HCSS/TNO conceptual framework The global resource nexus

Government Intervention in Rare Metal Markets

Rare metals are especially prominent in the debate due to:

• Western import dependence & crucial role of China

• indispensability for high- & green-tech applications

• inelasticity & concentration of supply

• fast-growing & highly volatile demand

This creates supply security concerns and makes (some) metals into

“strategic” resources!

The strategic value & political economy of each metal is unique, evolving

rapidly, and …

Sovereign Wealth Funds

China continues its policy of dominance on REE Export quotas for the Chinese rare-earth industry (tonnes)

Source: Chinese Ministry of Commerce

Year Period Chinese-owned Chinese /

Non-Chinese JV Sub-Total TOTAL

2009 H1 15,043 6,685 21,728

50,145 H2 18,257 10,160 28,417

2010 H1 16,304 5,978 22,282

30,258 H2 6,208 1,768 7,976

2011 H1 10,762 3,746 14,508

30,246 H2 12,221 3,517 15,738

2012 H1 16,066 5,160 21,226

30,996 H2 6,340 3,430 9,770

2013 H1 11,136 4,363 15,499

30,999 H2 11,163 4,337 15,500

2014 H1 10,756 4,354 15,110

30,611 H2 12,036 3,465 15,501

Launch of WTO case against China

China-Japan maritime incident

31-12-2014 Export

licenses

London Metal Exchange LME Sold in June ‘12 to Hong Kong Exchanges & Clearing (HKEx).

80% of World metal trade

– Former >25 Members club – Sold at 180 times its annual earnings (1,4 B$) – Biggest sponsor: China Development Bank, a

policy bank – Price stability through secret stocks

Now: China 100% owner

Chinese, Canadian & US policy after 2013 regarding REE

• Chinese Participations in several REE locations • A non-binding China, Greenland MOU of Kvanjefeld

REE • USA: S-1600 legislation proposal to subsidize a

Billion+ USD to built a separation facility within US borders

• Resources Quebec Inc., as agent for the Canadian Government, bought 28% of Kipawa heavy rare earths deposit

Chinese control mechanisms from buying raw materials to concessions to trading

platforms since 2012 Iron

Hugs

Oil futures

Pan Asian Gold Exchange

Government bond and silver futures

Futures trading in:

• agricultural products

• live hogs

• Late-season rice

• Eggs

• Potatoes

COFCO China, the largest grain, oil and foodstuff company in China has bought 51% Nidera

in feb 2014

• Nidera is a NL based major international agribusiness and trading company with an annual turnover in excess of USD 17 billion.

• Currently Nidera has domestic and international operations in 21 major export and import countries and distributes its products to more than 60 countries in the world.

• By consolidating its presence throughout the value chain, Nidera has created a platform that efficiently connects agricultural producers and food consumers.

For further information J.G.M. (Michel) Rademaker, MTL Deputy Director, Market, and Operations Office +31 70 3184842 Mobile +31 6 24686023 E-mail michelrademaker@hcss.nl Also find us on Twitter (hcssnl), LinkedIn Android or Apple

Visiting and Postal Address Lange Voorhout 16 2514 EE The Hague The Netherlands Europe

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Wilhelmina van Pruisenweg 104 The Hague, The Netherlands Europe

CV Michel Rademaker Michel Rademaker is the Deputy Director of HCSS. He has a degree in Transport and Logistics, obtained at the University of Tilburg. He gained fifteen years of hands-on experience as an officer of The Netherlands Royal Army, where he held various military operational and staff posts and served a term in former Yugoslavia. After leaving the armed forces, Mr. Rademaker went on to work at TNO The Netherlands as a project and programme manager and senior policy advisor for ten years. As NATO RTO project leader, he developed with his teams new serious gaming assessment methods for defence. He conducted several assessments of security technologies, including disruptive ones, and worked on numerous strategic security topics. He has written several book chapters, numerous research reports and articles. He served as secretary of the pilot joint venture TNO Clingendael Centre for Strategic Studies for three years and was one of the co-founders of its successor HCSS. At HCSS he is responsible for business development. He is particularly interested in setting up multi-stakeholder projects on new and upcoming security and political economic themes. For example, with his team he supported the development of the Dutch national security strategy and crisis management exercises. He is one of the initiators of The Hague Security Delta, the biggest security cluster in Europe, and leads projects for this cluster. His fields of expertise include security strategy, policy, concepts and doctrines, technology surveys and assessments, and serious gaming techniques. He is also initiator of the RMS Platform and the Centre of Expertise Resources and his fields of expertise include the geopolitical and economic security implications of raw materials and energy supply; and the development of policies. He frequently acts as moderator in workshops, as a trainer, as guest lecturer at various universities and speaker in conferences, and as a commentator in news media. Follow him on Twitter @michelrademaker

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