A Rare Opportunity

Alberta could add to its economy and play a national security role at the same time

Help Alberta Review grow by sharing with your friends - please forward this email or share on social media.

Rare earth minerals make the modern world possible. All electronics require them, and the more advanced they are, the more of these minerals are needed. Any transition from fossil fuels to renewable resources - especially electric or hydrogen cars - require the minerals in abundance. Military dominance requires a steady and secured supply.

That last application is where the problem really asserts itself. While their share of the trade has shrunk, China still controls, as of 2019, 85 percent of the world’s rare earth mineral processing power and supplied 80 percent of the U.S. supply. Up to 37 percent of the world’s reserves of 17 elements considered rare earth minerals are in China. This was a deliberate strategy. In 1992, Deng Xiaoping said that “the Middle East has oil, China has rare earths.” Knowing the importance of these minerals, they bought mines and processing plants just to close them, manipulating prices and ensuring only the Chinese industry remains economical. Few were aware of this control.

But they tipped their hand too early. After Chinese vessels rammed a Japanese fishing trawler in disputed waters (well, disputed by China but not by the rest of the world) in 2010, the Chinese stopped shipments of rare earth minerals, deadly to Japan’s electronics and high tech industries. The world took notice.

The United States is starting to take action. This week the Pentagon signed a contract with an Australian company to start work on a rare earth separation facility in Texas, and they are funding mines there and in California. Shoehorned into the recent COVID-19 relief bill, currently making its way through Congress, is the American Mineral Security Act. While it probably doesn’t belong in a COVID stimulus bill, it is needed legislation, at least for those concerned about Chinese control of strategically key elements - which should be all of us.

Because of American strategic concerns, Alberta has an opportunity. The U.S. Department of Energy Office of Scientific and Technical Information has produced a paper discussing the ability to mine rare earth minerals from the oil sands. Alberta, and Canada as a whole, has some of the largest reserves of the elements. Alberta’s black shale has significant deposits, and so too does northern Saskatchewan and the Northwest Territories.

The location of Canada’s deposits is Alberta’s opportunity. The significant costs that have allowed China to create a stranglehold on the trade are in processing. While Canada does have large reserves, the elements are not as rare as their name implies - they just exist in trace amounts over large areas - so the processing becomes important. As we’ve learned in this province time and time again, the sustainable money isn’t in mining or drilling, but processing. With a lot of Canada’s deposits centred not only in Alberta but in neighbouring provinces and territories with less capital and less industrial capacity, Alberta should naturally become a processing hub. Quebec is also home to large deposits, so a current foe of oil development could be an ally in this.

The current U.S. Administration may favour America-only mining and processing, but this will not last. A President Biden will be moving aggressively to patch-up friendships, and when he blocks the Keystone XL pipeline (there is little political downside for him and it will be an easy piece of red meat to throw to his progressive base) he will want to give Canada, and Alberta, something in return. Pentagon investment in rare earth minerals could be that something. If Trump wins in November, a continued strategic focus on countering China will necessitate focus on supply chains for essential materiel. Either way, Alberta should be in Washington meeting with Pentagon officials, trade officials, and the National Security Advisor constantly, explaining how important we can be to the defence industrial base. Canada is already pushing to be included in the U.S. plans to secure the supply chain, but it is imperative that Alberta ensure its voice is heard.

As the Globe and Mail explains, the reason Canadian and American mines are uneconomical is because the Chinese run the market so much profitability is impossible. Due to an outside, malicious actor, there is market failure. This means that to ensure supply, government will likely have to prop up friendly producers, either through direct subsidies, loans, or grants, or through sky-high tariffs. Free markets should dictate production, but for some things government money is required to keep unprofitable businesses alive. National security is one of them.

There will also be significant environmental hurdles to overcome - extraction is a hard process, requiring an immense amount of chemicals and tailings ponds, and mass amounts of dirt needs to be moved to process through and sift out the elements. The opposition to pipelines and oil sands may only be an opening act for activists opposed to rare earth mining.

But these hurdles can be overcome with a government abundant in foresight and backbone. Help the economy, save the world. What more could Albertans ask for?

---

Under Covered Stories

• Ottawa's fig-leaf excuse for inviting Chinese X-rays into Canada's embassies just blew away (National Post) - When a contract that allowed Chinese state owned companies into the security systems of Canadian embassies was awarded, the reasoning was because they had the lowest bid. It turns out they didn’t. And, in addition to this, the company that was awarded the x-ray and screening equipment contract, Nuctech, has been shown to use honey-pots, fraud and bribery to win contracts in Taiwan, was accused of dumping in Europe, and unscrupulous behaviour in Namibia. While an x-ray machine isn’t on the surface a major security threat, the machines aren’t the problem:

  “It is a huge security threat because you’re behind the firewall,” he said. “A machine is just a machine, but the first time I send a technician in to do a repair, I can put anything in there and you wouldn’t be able to find it without specifically screening for it.” (The Nuctech embassy contract includes delivery, installation, operator training and software.)”

  The contract award is just another example of the blindness Canada has towards the regime, and geopolitics in general:

  “A final question: Is this government totally oblivious to the Chinese strategy of making its position unassailable and breaking the resistance of its adversaries without fighting?

  The answer to that question on this evidence is, most assuredly, yes.”

• Indonesia: the world’s most underreported country (Unherd) - Indonesia has almost 270M people and may be the fifth largest economy in the world by 2024 - whether this happens or not depends on many factors, but it will nonetheless become a major economic player. And yet, no one talks about it. There are no heavily-publicized trade missions to the country, no diplomatic focus. The focus on China makes sense, but with the need to pivot our exports from a country that uses import restrictions as a hard power tool (and India can be pretty protectionist too) shows that maybe we should be talking about Indonesia a little but more.

• Temperature checks and ‘deep cleaning’ aren’t good at stopping coronavirus. So why do we bother? (Global News) - The answer is simple - it puts people at ease. Temperature checks are largely pointless, because asymptomatic people can still spread the disease, and surfaces are less of a vector for transmission than originally thought. Gloves may hurt, because people will wash their hands less. Masks outside are also pointless, since the risk is so low of catching the virus when the wind is blowing and the sun is shining. The psychological need to “do something” - as well as the political need to be seen to do something - is what drives people to do things that have been proven to be ineffective or useless.

---

Interesting Long Reads

• Why everyone needs to stop 'Norwailing' over Alberta's oil piggy bank (CBC) - Comparative politics is a sub-discipline of political science all to itself, but it does have its limits. In Alberta, we are always comparing ourselves to other provinces – the UCP government in particular likes to compare per-capita spending as justification for dangerous cuts – but comparisons like these have their limits. Differences between jurisdictions more often than not ignore fundamental differences in geography, populations, or economics. Max Fawcett outlines why Alberta needs to stop being compared to Norway. Yes, Alberta should have – and still could – manage the Heritage Fund better, but a number of factors explain why it didn’t happen. A covetous federal government, a resource that didn’t seem as finite as the Norwegian one, and a far more dispersed population with higher costs of service all contributed to less saving of natural resource revenues.

• The U.S. Has AI Competition All Wrong (Foreign Affairs) - China is often said to have an advantage in Artificial Intelligence and Machine Learning solely due to its size. One billion people equals a lot of data with which to train algorithms. And he who commands the AI high ground will command the battlefield of tomorrow. But the ability to excel in AI depends on three things, not one: data, algorithms, and computing power. This article contends that last is largely ignored by policy-makers, but is the most important. Currently, the U.S. has the advantage, and this argues that they should work hard to maintain it.

• Deepfakes Are Getting Better, Easier to Make, and Cheaper (Defense One) - Deepfakes will take disinformation, polarization, and political risk to a whole new level, and they're getting easier to make. This video of President Obama saying “President Trump is a total and complete dipshit,” made the technique world renowned. These can have world-changing geopolitical consequences (imagine a deep fake of Trump declaring war on a nuclear power), and unscrupulous PR firms will - likely - happily produce them during elections - or for companies looking to discredit a rival. By the time its exposed as a deepfake, the lie will be part of the narrative. A new paper presented at Black Hat, a cyber conference, has shown just how cheap and easy these are to produce. New regulations of the internet and digital technologies will be essential, but fought rabidly by the libertarian tech sector.

---

Alberta Review relies on subscriptions to operate (we hate ads, and they’re kind of pointless). Please consider subscribing to support the publication.

Alberta Review is in no way associated with previous iterations of the publication Alberta Review. www.albertareview.com© 2020 Alberta Review. See privacy and terms.