The geopolitical analysis quarterly reports are in response to the growing need for an assessment of the impact of political risk on the demand and supply of various commodities. Each quarter we will focus on a different commodity, and analyse the potential for risk in the major countries of that particular commodity.
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China controls 97% of the world’s production of rare earth elements (REE), and is now slapping quotas on the amount of its REE available for export, with astonishing price effects. Each tonne of Chinese REE exports was valued at $109,036 (on a free on board basis) in February 2011, the first time they have risen above the $100,000/tonne threshold. Cerium, lanthanum and neodymium have all practically doubled in price in March 2011 alone. But what are rare earth elements exactly? What applications do they have and what are they vital for? And what does the concentration of supply in China mean for consumers in the short and longer terms? This report examines China’s REE policy, evaluates the sovereign risk to supply this poses and the response from producers and consumers worldwide, as well as the impact new exploration will have on output. It also examines demand trends, and looks at the outcomes and likely implications for the market and for the price of REE.
Water - vital for life, vital for peace. That is the title of VM Group's latest geo-political analysis, published in December 2010. The report considers the current lopsided nature of the world's supply of potable fresh water, and argues that it is getting worse. There are some practical steps that urgently need to be taken - but they are expensive and require a coordination of international political effort, the like of which has never been seen before. Without such effort, the likelihood of 'water wars' breaking out in the next few decades will increase.
For archived geopolitical analysis quarterly reports, click here.
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