[OPE] Scarce commodities....

Two examples:

Soaring world copper prices a challenge for $2b industry
By Christopher Adams
New Zealand Herald Feb 9, 2011

(...) Copper futures in New York hit a record US$4.63 a pound on Monday.
(...) Increasing demand from emerging economies, especially China, has been
blamed for the rising price of copper, which now costs eight times more than
in 2000. US investment bank JP Morgan reportedly bought US$1.5 billion of
the commodity in December, 50 to 80 per cent of the 350,000 tonnes of copper
reserves. Since then, copper prices have increased by more than 16 per cent
on the LME http://www.lme.com/copper.asp. Proctor said he had heard that the
investment bank had physically bought the copper, as opposed to a standard
futures contract, and was storing it. "The only fear is, I guess, what time
they decide to dump that material on to the market." This week Britain's
Daily Telegraph reported that electricity substations in the UK were being
guarded by former Gurka soldiers as criminals targeted the facilities for
copper.
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10704969

Scramble for lithium gathers pace
By Christian Oliver in Seoul, Jonathan Soble in Tokyo and Kathrin Hille in
Beijing
FT March 8 2010

(...) While China has some resources, Japan and South Korea are competing
hard for international lithium reserves. Seoul has set aside $12bn for
acquisitions in the raw materials business this year and last year sent the
president's brother to seal a preliminary lithium deal with Bolivia, holder
of the world's biggest reserves. Japanese rivals are snapping at Korea's
heels, with Mitsubishi Corp and Sumitomo Corp, two of the biggest trading
houses, seeking rights to extract lithium from Bolivia's Uyuni salt flats,
believed to hold the world's biggest deposits. Toyota Tsuho, a trader partly
owned by Toyota Motor, has agreed to buy a 25 per cent stake in Argentina's
Olaroz lithium-potash development, partly helped by low-interest loans from
Tokyo. Not to be left out of the scramble for Latin America, South Korean
conglomerate Posco is buying into lithium extraction projects in Mexico and
Chile. In spite of such efforts, Samsung Economic Research Institute, one of
Korea's main think tanks, published a paper arguing that Seoul was trailing
rivals in the pursuit of rare metals. It recommended the bulk of the nation's
aid be linked to countries with such reserves and called on pension funds to
play a bigger role in resource diplomacy. China needs to import about half
its lithium. Researchers at the Qinghai Institute of Salt Lakes, where China
is thought to hold substantial reserves, said there was no hurry to replace
imports with domestic output. Processing technologies are not yet advanced
enough to make tapping the salt lakes cheaper than importing, they said.
(...)
http://www.ft.com/cms/s/0/3cd33dbc-2ae0-11df-886b-00144feabdc0.html#axzz1DPGjAvW1

In sector after sector across the world economy though, you can trace the
same sort of pattern: large conglomerates buy up resources which are
essential inputs for industry, or utilities on which households depend. The
neoliberal hoohah about "competition" is deceptive, because in reality the
trend is going into the exact opposite direction: more and more competitors
are being bought out.

The logical outcome of this, I think, is that it contributes to a higher
rate of price inflation. Once the stock of durables left unsold because of
the financial crisis is cleared, the prices of the new durables will show a
tendency to rise. Both the PPI and the CPI will rise. Then interest rates
are likely to rise also. In total, it means that the cost of living is going
to increase, while for the majority after-tax income remains pretty much
constant. The effect of that is that the "value of labour-power" declines.
An increasing fraction of the income earners loses the ability to save any
funds at all. It is no wonder then that people get concerned with inequality
and with the rich-poor gap. But the unresolved question is how you could
wrest a better existence for the working population and its dependents out
of the existing set-up.

Jurriaan

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Received on Tue Feb 8 17:43:14 2011